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Do I Need a Merchant Account?

Do I Need a Merchant Account?
That's a good question. Most serious businesses accept credit cards, however, if you're just starting out, you may want to consider other options like a third party processor like paypal standard, for example.

Here's a good rule of thumb:

If you process $3,000 or more per month on your website it is more cost effective to have your own merchant account than to go with a third-party processor like Paypal. It's less for an 'in person' account.


Example: Sales of $3,000 from 75 transactions - that's the tipping point when a merchant account becomes more cost-effective than a third-party processor like paypal.

Online Solutions:

Square:
3.50% of $3,000 = $105
$0.15 x 75 = $11.25
Total fees $116.25

Paypal standard (standard paypal account)
2.9% of $3,000 = $87
$0.30 x 75 = $22.50
Total fees $109.50

Merchant account through HostingCT / Moneris
2.17% of $3,000 = $65.10
$0.20 x 75 = $15
Gateway = $10
Statement = $10
PCI Compliance $7
Total fees $107.10

The more sales you have, the less you pay with your own merchant account.



Mobile solutions for use on the road:

Square - half swiped
2.75% of $1,500 = $41.25
3.5% of $1,500 = $52.50
$0.15 x 37 = $5.55
Total fees $99.30

PayWARE Mobile Gateway - iPhone (swipe only)
$14.95/mo (for one phone, add $10 for each addtl)
1.79% x $2500 = $53.70
$3,000 x $0.10 = $30
$6.95/mo PCI
Total fees $90.65
(Plus one time set-up fee of $69.95)

Square - all swiped
2.75% of $3,000 = $82.50
Total fees $82.50


Higher sales, small average sale - $18,000 per month in sales in 1200 transactions (3/4 swiped, 1/4 keyed in).

Square
2.75% of $13,500 = $371.25
3.5% of $4,500 = $157.50
$0.15 x 1200 = $180
Total fees $709

Merchant Account
1.79% of $13,500 = $241.65
2.0% of $4,500 = $90
$0.20 x 1200 = $240
Gateway = $10
Statement = $10
PCI Compliance $7
Total fees $599



 

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