Modes of online payment

Today’s harsh business climate necessitates e-commerce that is fast, hassle free and reliable.  Checks and cash modes of payment are dwindling to a bare minimum. Today it is the credit card and debit card modes of payment that are accepted for all online purchases, worldwide.

Enabling secure online transactions

However, all this also accelerates chances of fraudulent transactions.  As the owner of a website, you need to ensure all forms of credit/debit card payment are secure and have easy navigability for the users.  However, chances are, there will be innumerable credit card companies and users involved on a daily basis.  It would be hard to keep a track of every such credit card company and perform necessary follow-ups.  A merchant account provider can help to a great extent in this endeavor.

What is a merchant account?

Merchant account providers save you from the hassle of having to follow up with each individual credit card company for the payments.  With already established infrastructure and resources in place, merchant account providers are well enabled to carry out this task for e-commerce websites.

What is a merchant account affiliate program?

A merchant account affiliate program involves earning extra income by referring merchant account providers to individual e-commerce websites.  The way this works is if you have referred your designated merchant account provider to a website, every time a sale happens, you get a commission from it.  These merchant account affiliate programs can offer a great way to earn income through the Internet.  A lot of people have earned thousands through such merchant account affiliate programs.

Mistakes to avoid

However there are several things you need to consider when dealing with a merchant account affiliate program.

• Do a thorough research before zeroing on a merchant account affiliate program.  The reason: Some merchant account providers are not reputable and will not offer value to either the merchant or to you.  Such companies will not offer good profit margins -- assuming they will even send you your deserved commission.  
• Think out of the box.  This means coming up with different, innovative ways to promote the merchant account affiliate program.
• Plan it out.  Just like any new venture, you need to plan on choosing the correct merchant account affiliate program for you.  Many people get carried away with the vast range of choices available and end up picking one that is not in sync with their own interests.
• Don’t pick too many. This is another common mistake people make.  In the hope of earning extra income from multiple sources, people choose too many affiliate programs, thereby losing focus.  The trick is to pick one to start with and then gradually choose others, over a period of time.
• Try out the product or service being offered.  As an affiliate, your sole purpose is to market the product or service being offered by the merchant account to as many customers as possible.  And you also need to do this in the most incisive and persuasive manner.  It is more difficult to accomplish this if you haven’t tried the product yourself.  Therefore, if possible, try out the product so that you get a fair idea of its pros and cons and can persuade customers accordingly.

A home-based business is a different piece of cake altogether!  Extra income, being your own boss, controlling your own destiny, freedom from corporate politics, working on your own time, and having enough time to spend with your family are part of the inherent perks.  However, all the reasons that prompted you to embark on a home-based business may soon get evaporated.  Within a short time, you realize that you have to work twice as hard and the precious time with family becomes more elusive.  Moreover, the start up cost is of considerable consideration to you and that without discipline the end result will not be favorable. 

Along with this, you realize the importance of accepting credit cards.  This is where you think about opening a merchant account.  But with your initial small client base, how do you establish a merchant account that is crucial to your business' operation but does not pinch your bottomline?  With proper research, you will find that many merchant account providers have special packages for home-based businesses. 

Weighing the pros and cons of these packages can be time consuming but is worthwhile as you will be not only be wiser but also wealthier by the end of the day.  For your benefit, several pros and cons are presented in this article.  However, every business is unique and you know your business the best.  Hence, you may find more pros and cons that adapt to your business in a more suitable way than what is presented here.  The more your find, the better choice you will be able to exercise.

Home-based business owners generally sell products / services that can be purchased online or through mail order.  Most home-based businesses prefer selling online.  Here you have two options for taking credit card payments.  One is via banks and independent sales organizations (ISOs), which offer true merchant accounts.  The other option is to set up an account with third party providers, such as PayPal.

The home-based business owner must be approved to establish a true merchant account with banks or ISOs.  (This could be a problem.)  An underwriting process needs to be performed where the merchant's personal credit score rating is evaluated as well as the nature of the business and any profitable history, if applicable.  Once accepted, the home-based business owner owns the merchant account where funds are directly deposited into his/her account (a big plus) and customer bank statements reflect the name of the business (another important advantage).  As underwriting has been conducted, there is also less of a chance that funds will be held (thumbs up) and a greater chance that chargebacks can be won (very positive aspect) than third party programs offer.

In the vital area of rates, banks and ISOs may charge fees that are initially higher than those assessed by third party providers (disappointing).  (Still, there exist banks and ISOs that charge very low rates, competing with their third pary counterparts.)  But many experts in the merchant account field, assert that as the home-based business owner begins to process more, increasing monthly transaction volume, total merchant account rates are less than those charged by third party providers.  This is because their discount and transaction rates (i.e., fees per transaction) are generally lower than their competitors (sounding better).

With third party providers, you have to use their merchant account (a negative).  This means that the money is deposited in their account, from where you have to withdraw.  With unscrupulous third party providers, it may take a long time to withdraw your money, or you may not receive your money at all as some providers are outright frauds (be alert).  Another disadvantage is that it their name and not yours is reflected on your customer's credit card statement (a minus).  This may lead to confusion as the customer may not relate the payment to the third party provider with the purchase made at your site, resulting in the customer seeking a chargeback.  But if a home-based business owner needs to set up a system to accept payments quickly and easily, and with relative little upfront cost, third party providers may be very suitable (all beneficial components of third party providers).  

Nevertheless, albeit mine is a biased viewpoint, the best bet for a home based business, in the long term, is owning your own merchant account.  The advantages far outweigh the disadvantages, with the prime one that the money is deposited in your own merchant account over which you have full control.  Since the money is deposited directly into your own merchant account, you need not spend sleepless nights over your money being held -- at least on most occasions.  Please note that banks and ISO can hold your money, too, if they need to verify the authenticy of any given transaction.  But generally, reputable banks and ISOs will work with you and try to confirm the validity of transactions in a speedy manner.

True merchant accounts also happily enable you to have your business' name featured on the customer's credit card statement.  Consequently, no confusion is created and chargebacks are dramatically reduced.  Furthermore, true merchant accounts offer the advantageous option to take payments by swiping credit cards (offline) or online.  You can take payments by telephone, issue refunds and you can charge for recurring services like subscriptions with ease.  Associated fees can be very affordable, depending on the merchant account provider selected.

It appears that the home-based business owner must consider the following:

- Is it imperative to have credit card processing capability? (likely answer of yes)

- Which type of merchant account provider should be selected -- banks / ISOs or third party providers?  (The scope of this blog entry.)

- Narrowing down further, which company should be selected to provide credit card processing capability?  (Research, compare and contrast and make an INTELLIgent decision on how to COLLECT funds.)

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To learn more about our merchant account services, please visit us at  http://www.intelli-collect.com.

You as a small business owner face a multitude of problems, on a daily basis, without any respite.  This phenomenon makes you think that your problems are unique and that you are the only one to face such difficulties.  Has anyone in this world ever encountered the type of problem you are facing? 

Surely, in this big, wide world, someone, somewhere, sometime, must have faced this same problem.  If so, then how did that person tackle the problem?  What were the challenges faced?  Was the problem solved at all?  How was it solved?  If answers to these questions are available to you, then you can also solve your problem quite easily. 

Finding this information and incorporating another’s ideas and strategies to solve your own similar problem, is known as finding and using a best practice.  Therefore, you can define a best practice as the practice that was or is the best for any given problem.  Big businesses regularly use best practices and have reaped billions of dollars in forecasting problems and avoiding them before they occur.  Small businesses can also benefit immensely from best practices.

Benefits of best practices

• Reduction in costs. You do not have to "reinvent the wheel".  You can use the knowledge gained by other companies and directly employ them in your business.  This saves money in research and development.
• Potholes can be identified early.  If you know that a pothole will come after a few yards, you are careful while driving, and will certainly avoid it, when it comes.  In business, mistakes are costly and avoiding mistakes is equal to making your profit jump.
• Find new ideas.  Recognize new ideas from beyond your business model and try to implement them if possible in your business.
• Performance is automatically improved.  When you start looking for best practices outside your domain, then you automatically raise the standards of excellence and propel your company to achieve greater milestones.

Finding best practices

Finding best practices is easier said than done.  Your problem has certain unique characteristics and finding a similar problem with similar characteristics, that has been successfully solved, is difficult.  For example, if you want to increase sales at your retail store, then you need to increase traffic at your store.  Besides promotional schemes, you may try to employ the strategy of giving in-store demonstrations with discount coupons presented to all the attendees.  You want to try this because you have read about the idea in a business magazine, touting the strategy’s effectiveness in driving traffic (i.e., giving away discount coupons to attendees increases sales).  You take this as a best practice of increasing sales and you soon launch the strategy at your retail store.  Nevertheless, for you it may not work because there are missing pieces to the practice’s puzzle.  For example, you do not possess the following information: How did they ensure that the attendance was complete or partially full?  What follow up did they do to ensure that the attendees utilized the discount coupons and thereby increased the sales? 

Such pre and post event information is vital, and without these, your best practice is not complete.  Such information is never published and is generally not revealed unless asked for.  Therefore, you can never have complete information about any best practice, and thus the best practices that you arrive at are only workable up to a certain level.  Thereafter, you have to employ your own judgment and understanding to realize the full potential of the implemented best practice. 

For example, you may find that the attendance in your in-store demonstration is increased if you make reminder calls to all the invited attendees the day before the demonstration.  You may even find that efficient follow up of the discount coupons with phone calls and mailers has increased the traffic to your retail store and thus increased your sales.  You do not know these pre and post steps from the available best practice, and hence you have to use your own judgment to reason them out.  Therefore, any best practice is not 100% complete in itself.  You have to contribute your own share of knowledge to make it 100% complete.

Steps for successful implementation of best practices

1. Identify the business processes that you want to improve.  For example, you may want to improve sales, production, logistics, supply chain management (SCM), human resource management (HRM), customer relations management (CRM), billing, accounting, etc.  All the areas of business can be improved upon and as such, you may identify all of them.
2. After successful identification of the problem areas, take up a single problem at a time.  Do not multitask and try to solve many problems simultaneously.  Taking up one at a time improves the quality of the solution.
3. Find out all the details of your competitors within and outside your area of operation.  Find out what are their best practices.  You have to do this because it is sensible to borrow best practices.  You may not have the resources to undertake costly research and arrive at your own best practices.
4. Modify the best practices that you have accumulated, into your own problem setting.  Use your reasoning regarding the pre and post activities.
5. Establish measurement parameters.  Your best practices will be measured against these benchmarks.
6. Implement your best practices over a given period.
7. Measure it.  This will give the result of your implementation.
8. Modify and fine-tune it further to suit your specific business needs, if required.
9. Implement again.  Measure.  Evaluate.  Modify.
10. This cycle goes on until your benchmark is achieved for that particular problem area.
11. Move on to the next problem area and repeat the steps from step 2.

Few examples of best practices

* Sales: Manage POS (point-of-sales) systems, mailers, emails, product launches, e-commerce, and other services like eBay.

Marketing: Tap all sources of marketing, both offline and online.  Deliver high quality presentations, undertake effective e-mail marketing without spamming, use blogs to drive traffic to your website, utilize the latest technology with telling effect.

Customer Relations Management (CRM):  Track your customers, ask for their opinions.  Interaction with customers brings repeated business.  Use CRM software if necessary.  Resolve complaints and sticky issues fast before they become big.

* Communication: Use telephones, smart phones, cell phones, fax machines, email, and services like VoIP to their maximum effect.

Financial Management:  Use your cash flow effectively.  Understand when to add employees or when to go on a restructuring drive. Quality outsourcing can help in the growth of your business.  Use accounting software to establish employee payroll and get the records straight.  Undertake tax planning and plan your taxes with any good tax software if required.

Document Management:  With computers you can make filing a real pleasure.  Reduce typing by scanning documents.  Share the files to save time and protect those files that need to be hidden.  Keep daily backups.  Keep daily backups.  Keep daily backups.  If still you have not understood the importance of backing up your data daily, let me declare again, keep daily backups.

Website:  Make a useful website.  It should handle selling, marketing, displaying products, e-commerce, registering orders, getting feedback, handling customer complaints, linking with your blog, using RSS effectively, and doing every other activity that converts traffic to your site into actual or potential sales.

Security:  Protection of employees and customers, material, and information is essential.  You can monitor incoming and outgoing calls, if necessary.  You can install locking software on your computer by passwords and other means.  You can restrict access to important areas like finance, customer data, etc.  You can also install software to protect your wireless network.

Concentrate on small business best practices

Although you may be tempted to follow the best practices followed by big businesses, you should not attempt to follow them.  Their level of operations are different, their problems are different.  Since your business is a small business, you should find out the best practices of small businesses only, as they will be much more flexible and will be easily adjusted into your small business setting. 

In time, following small business best practices, your small business should soon develop into big business.

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To learn more about our merchant account services, please visit us at  http://www.intelli-collect.com.

If attaining business success is not important for you to achieve, then either you are completely drowned in debt and/or encountering attention-diverting personal crises, or you have sold your business for a steady, perhaps low-paying 9 to 5 job.  If you do not fit in any of the above situations, then business success is important to you. 

There are only two reasons why you should do business.  First is to earn more money than you would have earned from a job, and second is to donate extra money to charitable causes.  The second cause is generally not that strictly followed.  However, every businessperson strictly follows the first cause.

In the initial stages of your business, you might reap the following benefits: You are your own boss, you decide the schedule of your work, you decide which projects and tasks to prioritize or even work on, you exhibit more control over your salary, you decide the company’s policies, procedures and rules – all appealing aspects.  

However, after a few months, you soon realize, that business is not as easy as it seemed.  You realize that your business is in a loss, and has not even reached the break-even point.  You realize that you have to work much more than what you would have worked on a job.  You never have free time on your hands, your spouse and children complain that you do not give them enough attention, and your social life becomes non-existent. Every moment you only think of your business and soon you get obsessed with the idea of making your business come out of the deadly spiral of loss. 

You buy and read books on business to get more ideas, and after a while, realize that you learned relatively little (at least, how to implement the strategies for your business) and you are at the same place from where you started initially.  You think it was a wrong decision to start your own business or that you are probably not suited for business.  You think you are a failure, and get hopelessly depressed, dejected, and disconsolate.

Then in the depths of your agony, realization dawns on you.  You understand that the only way to survive in business is to keep existing clients and get more clients.  This means you need to focus more on marketing, sales, and production simultaneously.  You also realize that business is not a one-man show.  You may need to hire employees or subcontract and delegate or assign responsibilities to other parties.  This means incurring more expenditure, which means more working capital.  Thus, you arrive at the first correct conclusion, that to do business you need capital.

But already you have invested in your business and have not yet recovered your investment as your business is at a loss.  You do not have any more money to invest.  You decide to take a business loan and you apply to banks and financial institutions.  They reject your application outright, as they do not sponsor loss-making units.  So now, you are in a fix. You need to inject capital to make your business survive but cannot find any capital from anywhere.  You take a deep breath and sit down to think.  Hence, you arrive at the second correct conclusion, that to do business you need to think.

You are confident of your products/services that you sell.  You also know that you must follow a strict discipline to increase productivity. You decide to take a personal loan by mortgaging your home.  You are taking a big decision, because if you fail to make a profit, then you stand to lose your home.  You and your family will be without any shelter, and will literally come down to live on the streets.  (I am purposely dramatizing events to increase reader interest.)  Now you are hanging on a cliff, with a sharp and deep fall below and a steep climb above.  The only thing that is in your favor is your determination, resolve, willpower, creativity and your enthusiasm to succeed.  Thus, you arrive at the third correct conclusion, that to do business you need determination, resolve, willpower, creativity and enthusiasm to succeed.

You decide to mortgage your home or any other assets that you may have in order to raise capital.  Keeping assets as collateral, you will definitely get a loan, although based on your low credit standing, the interest rates may be a bit high.  Finally, you have mortgaged your assets and managed to get capital.  Now you need to utilize that capital in the best possible way you can so that not a single cent is wasted. 

You plan to spend it on marketing and production. You decide to hire two people, one for marketing and one for production.  While you will assist with these functions, you need to engage in pursuing leads for prospective clients, following up with existing clients, and performing administrative.  With enthusiasm, willpower and drive, you start aggressively on these functions.  Your example motivates your employees to perform better and achieve greater targets.  Soon you find your business growing.  Thus, you arrive at the fourth correct conclusion, that to do business you need a good team.

Now with your growing business, you have growing financial needs and you need more capital.  With your profits, the first thing you should do is to payback your mortgage as fast as possible, and release your home or other assets kept as collateral.  This will provide security to your family and successful repayment of the loan will increase your credit rating.  Thereafter, you should approach financial institutions for bill/invoice discounting services.  With bill/invoice discounting, you will release locked up capital in your invoices and your working capital will increase.  Now you have fresh funds injected into your business for your business growth.  Thus, you arrive at the fifth correct conclusion, that to do business you need good financial management. 

Without taking any training classes, you have now become a multitasking expert.  You have reached a position where you can teach time management, total quality management (TQM), enterprise resource planning (ERP), supply chain management (SCM), public relations, sales and marketing management, and budgetary controls to any Harvard MBA graduate.  You can also teach them something more that no business school teaches, like having the guts to put everything at stake and coming out of it all victoriously.  Thus, you arrive at the sixth correct conclusion, that to do business you need guts.

Now you have a secure home, a happy family, a steady income, and a growing small business.  All this is possible only if you have the desire to succeed.  So, is business success important enough for you to achieve?  Yes, you bet it is where success is spelled with a bold, capital S.

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To learn more about our merchant account services, please visit us at  http://www.intelli-collect.com.

"Merchants are all cheats.  They are out there only to pull a fast one on unsuspecting customers."  A debatable statement indeed, yet, if you ask 100 consumers, perhaps 50% will agree.  This is because there are many disreputable merchants – even outnumbering reputable ones in certain markets.  They devise schemes, plans, stratagems, and all kinds of ploys to ensure that you are trapped and spend much more than you had ever anticipated.

As with any other business, this controversial statement also applies to the merchant account business. If your agent doesn't tell you something, it doesn't mean that it doesn't exist.  When you ask your agent about it, he/she will point to the fine print in the contract that you had signed.  So, it was there after all, but you missed reading it because the printing was so fine, or you didn't have enough time on your hands or you had blind faith in your agent. 

Your agent will wipe out his hands clean of the issue and leave you with the dirty towel to mop up the mess.  Ultimately, you and only you, will have to face the music and pay for the charges that you thought did not exist, because your agent didn't tell you anything about it.  So the earlier you start knowing, the lesser amount of agony you will undergo, because in the merchant account field, what you don't know can hurt you, yes, right below the belt … in the wallet!

The Latin phrase "Caveat Emptor" meaning "Let the buyer beware" is very much true in the merchant account field.  There are merchant account providers who do not fully disclose their charges like the cancellation fee, chargeback fee, non-qualified fee, statement fee, and other fees.  You come to know of these fees only after you have entered into an agreement with the merchant account provider by signing the merchant account contract.  These undisclosed fees are also known as "hidden fees" and those merchant account providers who usually offer "free merchant accounts" are prone to take these unadvertised fees and charges.

Once you find yourself trapped in a disadvantageous position, you would like to get out of it by terminating the contract.  The merchant account provider has already reasoned out such a situation, and has ensured that it becomes extremely difficult for you to come out, by levying exorbitant charges known as cancellation fees.  The cancellation fee may be so high that it makes better economic sense to continue the account rather than terminate it.  This ensures that you stay until the end of the contract period and go on paying other high charges like non-qualified fees, high-ticket sales charges, chargeback fees, etc.

If due to your marketing efforts and/ or excellent product/service, your sales shoot up and cross the highest monthly volume stated, then merchant account providers hold up the funds, and do not release them until all the transactions are verified and result in successful sales.  The funds are held up for a period as determined by the provider, and you have no control over it.  The funds are interest free, thereby you stand to lose the interest also until the funds are released.

Another issue of vital importance is of chargebacks.  A chargeback is a refund claimed by the customer due to non-receipt of goods, poor quality, or due to any other reason.  The customer can only cancel the chargeback, and most of the time, you have to repay the customer.  A customer can initiate a chargeback even after 3 months have expired from the date of purchase. You, as a merchant, have to respond immediately or maximum within 10 days, if you want to prove that the chargeback is unjustified, offering evidence that the transaction is valid and should be upheld.

Chargebacks can significantly erode your profits and numerous chargebacks may blacklist you as a merchant, and you may not find any merchant account provider to offer you credit card processing capability in the future.  Reliable providers help a lot in chargebacks by promptly informing you so that you have enough time to justify your stand and open a dialogue with the customer so that the customer can possibly withdraw the chargeback.  If the provider delays, then you lose valuable time, and may not be able to prove your position resulting in payment of the chargeback to the customer and the chargeback fee to the merchant account provider.

Recommended Resource:
*** Warning: Blatant Self-Promotion ***

Please read our e-book that can be accessed via the following link: http://www.intelli-collect.com/accept_creditcards.pdf

This should acquaint the reader with what to look for and what to look out for in the merchant account field.

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Business thrives on customers.  Retaining old customers is as important as getting new customers.  Profit comes from repeated business and thus doing business with the same base of customers week to week or month to month, generates the need for recurring billing and recurring credit card processing. 

However, this requires manpower and time, thereby, increasing the overhead costs.  With today's technological advancements, the facet of recurring billing can be easily automated.  With automated recurring billing and recurring credit card processing, the overhead costs are minimized and profits increase.  For effective transfer of funds a virtual terminal and/or a payment gateway may be used by which bills may be generated and payment received.  

To install the mechanism of recurring billing and recurring credit card processing, merchants should obtain prior permission from the customers.  Usually, customers readily give their permission, as automated recurring billing also helps them in keeping track of payments and thereby their accounting processes get further streamlined.

10 benefits of automated recurring billing and recurring credit card processing

Benefit #1: Accuracy of the bill is achieved.  Updated prices can be reflected immediately.  Pricing may be changed as per the merchant's requirements, with little effort.  Thus, the bill always features the updated prices.  Hence, there is no mistake like entering old prices instead of new ones, which is a common mistake in manual billing.  Many times, where the bill consists of a long list of items, totaling errors creep up.  Through automated recurring billing, the totaling errors seldom materialize as greater accuracy is ensured.

Benefit #2: The bill collection process is smoothly started on time, thereby avoiding lost interest on delayed payments due to delayed bill submissions.  With automated recurring billing, the bill is always sent on time.

Benefit #3:  The customers know the time and date of the arrival of the bill, and thus it facilitates them in drawing up their plan as to the payment of the same.  This facility of allowing them to plan helps them to place more orders, increasing the business done with the merchant.

Benefit #4:  Security is enhanced.  There is no need for merchants to store sensitive information like credit card numbers at their end, as all the information is stored at the merchant account provider's or at the gateway.  This improves the security of the customer information, as it eliminates the risk of the sensitive information being corrupted, stolen, or compromised from their computer systems.

Benefit #5:  Confidence and loyalty is increased.  When customers know that the billing information and its payment is done under strict security measures by virtual terminals or payment gateways, it increases their level of confidence in transacting business with the respective merchant.  This increases loyalty amongst customers, as well as proves advantageous against competition.

Benefit #6:  Costs are significantly reduced.  There is a significant drop in overhead costs, as manual billing is replaced.  This eliminates the need of employing staff exclusively for billing purposes.

Benefit #7:  Releases blocked up costly real estate.  With no staff to handle manual billings, the office space previously used by them is released, which can be used for other purposes.

Benefit #8:  Modest additional fees charged.  Usually, merchant account providers charge $5 - $15 dollars more per month when providing a recurring payment option.  (Of course, the cost to open a merchant account must be factored into any decision when offering automatic payment.)

Benefit #9:  Customer care is improved by advance notifications.  Expirations of credit card and/or subscriptions are promptly notified in advance via e-mails, thus providing efficient customer care service.

Benefit #10:  Time is saved.  Automated recurring billing and recurring credit card processing saves time, which can be fruitfully utilized to garner more business and enter new markets for further expansion.

Businesses most apt to use automated recurring billing and recurring credit card processing