Figuring out payment processing is driving me crazy: Please help!

[SeanyG]

Hey guys,

Thanks for reading this thread.

I have been doing search after search on WF and Google for the last few days trying to figure out the best payment solution for my new IM business. I am very confused weather to go with a payment processor - 2co - or to set up a merchant account and payment gateway.

Here is what I need from a payment processing system:

- I'm in Canada.
- I am offering a low ticket intro product that is low priced + a free month of continuity. Users are then billed bi-weekly or monthly. Continuity is the goal.
- Affiliates aren't that big of a focus yet but may be in the future.
- Aweber manages my lists and it would be ideal if it automatically managed customers into respective buyers lists.

In my research here is what I have found & decided:

1) Payment Processors:

- Paypal is out because customers can't pay for recurring billing without signing up for a PayPal account. Clickbank is out because it has higher fees than 2co.

2) The other option is getting a Merchant Account, Payment Gateway and Shopping cart. Here is where I get confused:

- Everyone recommends Authorize.net. I am in Canada so how do I get an Authorize.net gateway? Is the problem that they only service US merchant accounts?

-Josh pointed me towards chargetoday.com (thanks!) but they haven't confirmed yet if they can work with Authorize.net. Does anyone know of any other authorize.net gateway enabled merchant accounts?

- A lot of you say that the Shopping Cart + Gateway + Merchant account set up is a lot cheaper than the Payment Processing companies. How is this possible when you have 3 different companies (Cart, Gateway & Merchant Account) taking transaction fees? Wouldn't a 2checkout be cheaper with the 1 fee of 5.5% + $.35 per transaction?

Your thoughts and help are appreciated!

~Sean

[awesometbn]

Hello Sean,

Just a few random thoughts . . . you didn't mention this, but I would recommend a robust membership management system. List management with aweber is great, but you want to integrate this into a complete software program like amember.com. This would allow you to use any payment processor since a membership system could use cron jobs on the web server for recurring billing.

Also, the shopping cart has proven the most useful for me when the customer wants to select multiple items, or is trying to save duplicate shipping costs on different products. But you might only have a single product, so I wonder if a shopping cart implementation is overkill.

[SeanyG]

Thanks for the thoughts Awesome BN!

Originally Posted by awesometbn

Hello Sean,
Just a few random thoughts . . . you didn't mention this, but I would recommend a robust membership management system. List management with aweber is great, but you want to integrate this into a complete software program like amember.com. This would allow you to use any payment processor since a membership system could use cron jobs on the web server for recurring billing.

This sounds complicated and I'm not sure that its necessary. I am not setting up a membership site here, I am going to be dumping customers emails that sign up into an aweber opt in forum and then they will be sent the link to the new audio interview monthly (automatically).

Because of the simple setup of this system, I think a full membership system may be overkill.

Originally Posted by awesometbn

Also, the shopping cart has proven the most useful for me when the customer wants to select multiple items, or is trying to save duplicate shipping costs on different products. But you might only have a single product, so I wonder if a shopping cart implementation is overkill.

You nailed it. I am pretty much just selling a single product with recurring billing and then an autoresponder that distributes the monthly content.

I think this is all a little overkill. To be honest I was even thinking that a Merchant Account / Gateway is a little overkill for just starting out....

Thoughts?

[Izet Hasanov]

PayPal offers a merchant account with very good rates and your customers don't need to have an account with them. Customers can use any major credit cards to make a purchase. This service is called PayPal Pro

kind regards

[SeanyG]

Ivan, I spoke with Paypal on the phone yesterday. They DO NOT accept recurring payments unless you sign up for an account with them.

Payments pro and standard is just the difference between having the Paypal checkout on your own site or just a link redirecting your customer to theirs. It make no difference for continuity (recurring payments).

Thanks.

Originally Posted by Izet Hasanov

PayPal offers a merchant account with very good rates and your customers don't need to have an account with them. Customers can use any major credit cards to make a purchase. This service is called PayPal Pro.

[Alp Bozkurt]

Majority of people have paypal.

If the product is IM related, I can say that %95 of people have paypal.

[SeanyG]

Originally Posted by Alp Bozkurt

I don't get why you don't use simply Paypal?

Buyers don't need to have paypal accounts to pay through paypal. They simply pay with their credit cards.

Please see my above post.

Originally Posted by SeanyG

Ivan, I spoke with Paypal on the phone yesterday. They DO NOT accept recurring payments unless you sign up for an account with them.

Payments pro and standard is just the difference between having the Paypal checkout on your own site or just a link redirecting your customer to theirs. It make no difference for continuity (recurring payments).

Thanks.

[Alp Bozkurt]

What's the main niche?

[SeanyG]

Thanks for all of the feedback so far guys.

Originally Posted by webcopywritersblog

have you though about google checkout, 1stshoppingcart and ejunkie.. there are so many others as well! Why don't you search? or ask WF members for further details!

I looked into Google Checkout but it is very limited a costly. There was a ton of launch hype but was a huge let down. I did a search and WF members said nothing but bad things.

1shoppingcart is a shopping cart, not a merchant account. It works with Powerpay, which uses Authorize.net, which won't work with the majority of Canadian merchant accounts... So again I am back to the same questions as above.

I have searched extensively and thats why I posted. I haven't been able to get answers to the specific questions I haven't been able to find via the WF seach and Google Search:

- Everyone recommends Authorize.net. I am in Canada so how do I get an Authorize.net gateway? Is the problem that they only service US merchant accounts?

-Josh pointed me towards chargetoday.com (thanks!) but they haven't confirmed yet if they can work with Authorize.net. Does anyone know of any other authorize.net gateway enabled merchant accounts?

- A lot of you say that the Shopping Cart + Gateway + Merchant account set up is a lot cheaper than the Payment Processing companies. How is this possible when you have 3 different companies (Cart, Gateway & Merchant Account) taking transaction fees? Wouldn't a 2checkout be cheaper with the 1 fee of 5.5% + $.35 per transaction?

[SeanyG]

Originally Posted by Alp Bozkurt

Majority of people have paypal.

If the product is IM related, I can say that %95 of people have paypal.

The niche is Aspiring Nightclub & Rave DJs.

Not a paypal friendly niche. I called up some other sites doing business in the industry and they said that their palpal numbers were low. 5-10% of their transactions are using paypal.

I still plan to offer paypal as an option for those that have PayPal accounts. But I need a better system for that 95% of my customers that want to pay just via credit card.

I thoughts 2checkout was that system but a lot of WFers posted that a merchant account and payment gateway is the way to go because it will cost way less in the long run...

[David-JP]

I've used worldpay- a little expensive, similar to paypal that its a 3rd party processor. Will create a user account after the payment is made.

David

[SeanyG]

Originally Posted by David-JP

I've used worldpay- a little expensive, similar to paypal that its a 3rd party processor. Will create a user account after the payment is made.

David

Cool.

Thanks David. I'll look into Worldpay.

Anyone else have advice on the merchant / gateway questions?

[SeanyG]

*bump* for those people in different time zones.

Crossing my fingers for some insight!

[Debbie Songster]

You need to call authorize.net and ask them which of their merchant partners works with Canadian businesses.

Regardless, you need a merchant account before you can use authorize.net. Authorize.net is just the gateway between the merchant account and your store or sales page.

Your "cart or store" can be as simple as a sales page with a buy button that goes directly to authorize.net's payment interface.
In order to use them you will need to make sure you have SSL capabilities on your domain since everything needs to be secure.

You need to understand that some places are the merchant and the processor all in one - like 2checkout, paypal and paydotcom, clickbank, etc.
Thats why they charge the higher fees.

Your challenge is getting someone who will handle recurring fees for you automatically.
Those all come with some type of fees attached.

Start making a list to compare.

Sometimes a "simple system" - like you described is not the best if you are trying to handle recurring billing customers

[RevenueRabbi]

Debbie,

just a small correction to your post:

paydotcom is NOT on that list, since they use paypal as the payment system.

[Josh Anderson]

Hi Sean,

I just got off the phone with the owner of the company a couple hours ago whom we are partnering with to provide Authorize.net enabled merchant accounts to all Canadians.

This is not a problem at all and I can extend this to anyone in Canada who needs an Authorize.net enabled merchant account.

I am about to fly out to the Canada Marketing Summit where I will be presenting about our ecommerce solution in Vancouver on Thursday.

However if you (or anyone else in Canada) PM's me with answers to the following questions I will personally email them to the owner of the company who will get you set up with a Canadian based merchant account enabled with an Authorize.net gateway:

Company Name:

DBA:

Contact Name:

Company Address:

Country:

Phone Number:

Fax:

Corporate Website:

Email Address:

Email Address:

Description of Product/Services:

Estimated Monthly Processing Volume:

Average Ticket:

Highest Ticket:

Have you ever processed credit cards before (if with paypal only answer "yes with paypal"):

[Josh Anderson]

Here is a lesson anyone who gets it can take to the bank in a major way:

--

In regards to your question about how a merchant account is cheaper...

Its just a matter of doing the math.

Take 100 $37 transactions a month for example.

100 x $37 x 5.5% + $35(transaction fees) = $285.50 a month using 2checkout

100 x $37 x 2.39% + $30 (transaction fees) + $30 (Gateway fee) = $148.30 a month using your own merchant account and an authorize.net gateway.

You just cut your cost in more than half that is a 51.9% savings.

Plus 2checkout should only be used as a last option because they are a reseller (third party processor) and you have no control over refunds and they can reject any product you want to sell for any reason they feel like.

The more volume you do the bigger the savings. You are basically keeping 2 1/4% more of your revenues.

Now add to that the ability to use killer ecommerce systems that do things like one click upsells...

I ran a test over the weekend on one click upsells... which you cannot do with clickbank, paypal, or 2checkout, and I increased my bottom line using nothing more than an unrelated resale rights product by at least 25%. In just 36 hours I generated approximately an extra $800 in sales on the back end for a $37 one click upsell alone!

And that was just a low dollar offer and test.

Anyone who jumps up and down swearing by Clickcrap and 2checkout just does not realize how much money they are leaving on the table.

I think the most important thing to ask your self is why Frank Kern, Amit Mehta, Russell Brunson, Mike Filsaime, Andy Jenkins, Brad Fallon, and everyone else you have seen doing launches lately uses their own merchant account and one click upsells?

The key is that they know that it is not necessarily how much you pay to implement a marketing strategy that matters but how much money it can make you ;-)

That is the power of having your own merchant account... and the reason why Authorize.net is important is because it is one of the best gateways there is and integrates with so many different ecommerce solutions.

[Kenneth L]

Originally Posted by Josh Anderson

Here is a lesson anyone who gets it can take to the bank in a major way:

--

In regards to your question about how a merchant account is cheaper...

Its just a matter of doing the math.

Take 100 $37 transactions a month for example.

100 x $37 x 5.5% + $35(transaction fees) = $285.50 a month using 2checkout

100 x $37 x 2.39% + $30 (transaction fees) + $30 (Gateway fee) = $148.30 a month using your own merchant account and an authorize.net gateway.

You just cut your cost in more than half that is a 51.9% savings.

Plus 2checkout should only be used as a last option because they are a reseller (third party processor) and you have no control over refunds and they can reject any product you want to sell for any reason they feel like.

The more volume you do the bigger the savings. You are basically keeping 2 1/4% more of your revenues.

Now add to that the ability to use killer ecommerce systems that do things like one click upsells...

I ran a test over the weekend on one click upsells... which you cannot do with clickbank, paypal, or 2checkout, and I increased my bottom line using nothing more than an unrelated resale rights product by at least 25%. In just 36 hours I generated approximately an extra $800 in sales on the back end for a $37 one click upsell alone!

And that was just a low dollar offer and test.

Anyone who jumps up and down swearing by Clickcrap and 2checkout just does not realize how much money they are leaving on the table.

I think the most important thing to ask your self is why Frank Kern, Amit Mehta, Russell Brunson, Mike Filsaime, Andy Jenkins, Brad Fallon, and everyone else you have seen doing launches lately uses their own merchant account and one click upsells?

The key is that they know that it is not necessarily how much you pay to implement a marketing strategy that matters but how much money it can make you ;-)

That is the power of having your own merchant account... and the reason why Authorize.net is important is because it is one of the best gateways there is and integrates with so many different ecommerce solutions.

Fantastic post Josh. Seems like own Merchant Account is the only way to go.

It's great you're enabling Canadians to get an Authorize.net Account.

I wonder do you have any plans to do the same for UK Marketers?

It would an absolutely amazing feature if you could do it and I'm sure you'd get hundreds of people from the UK, who are starved of Merchant Accounts, to sign up in quick succession.

Kenneth

[Josh Anderson]

I wonder do you have any plans to do the same for UK Marketers?

It would an absolutely amazing feature if you could do it and I'm sure you'd get hundreds of people from the UK, who are starved of Merchant Accounts, to sign up in quick succession.

Kenneth

Hi Kenneth,

We have two options for UK/EU as well as other International residents.

If you are serious and need an authorize.net account:

1. PM me a list of answers above that I listed for Sean and I will also submit your application. My partner has success 50% of the time in obtaining Authorize.net enabled merchant accounts for international applicants.

Yes, it is not as good as the 100% option for Canadian but there is a good chance we can get you one. As I mentioned 50% of the time we can.

For those in the EU who we cannot get an authorize.net enabled merchant account we can get you a Durango Merchant Services gateway enabled merchant account as an alternative. This is a good alternative because Durango has an authorize.net emulator. This means that any ecommerce solution that works with Authorize.net can easily be updated to work with Durango. We did this for our clients with our platform so that EU residents who do not qualify for an Authorize.net enabled merchant account can still use our Authorize.net features like one click upsells etc.

For other international people (50% of whom we can generally get Authorize.net accounts for) who do not qualify for the authorize.net account the last option is to incorporate in the EU at which time you would qualify for the durango gateway.

So in other words... if you are not in US or Canada... it does not hurt to try. I am willing to send in an app and my partner has agreed to do all he can to set international people up with Authorize.net enabled merchant accounts. However international applicants generally only qualify 50% of the time for this.

If you are serious and need my help just PM me the answers to the list of questions in my post above. However, do not do so unless you want to actually send in the application to be processed and have someone go through the trouble of finding an account for you.

[MemberWing]

Hi Josh,
I am interested in this as well and I am in Canada.
Questions:
- Can I registered fresh corporation in Canada to make this happen?
- Do i need to have corp bank accounts opened or just name and address would be enough? (I don't want to use my current corp accounts for this new project)
- What is DBA? What is Ticket?
- Estimated highest volume - this could go really high on the project I am launching - I want to have the highest volume available.

Please let me know.

Gleb

[Josh Anderson]

- Can I registered fresh corporation in Canada to make this happen?

Generally yes. However the terms usually depend on your personal credit in that case. For example I negotiated a 7 figure limit on a merchant account one time for a brand new corporation. The discount rate was 1% higher. It's worth a try because chances are high that you would have no problem and the worst they can say is no ;-)

- Do i need to have corp bank accounts opened or just name and address would be enough? (I don't want to use my current corp accounts for this new project)

You need a bank account for them to deposit your money into :-)

Just open a new bank account for the new corp first.

- What is DBA?

"Doing Business As" many companies have registered DBA names which are not the same as the incorporated name. So if you have a name that has been registered that you are using you would list that. Other wise the DBA will be the same as your registered company name.

What is Ticket?

How much you charge for your product. Average ticket is average price of an average product you normally sell.

- Estimated highest volume - this could go really high on the project I am launching - I want to have the highest volume available.

This is where you need to be careful if this is a new corp. Sometimes on brand new corps where you want to have a really high limit they might require a higher % or even a reserve. This is standard in the industry. Don't tell them you want a million dollar limit just because you want to make a million. Be reasonable and realize that they will work with you as you grow.

Telling them you want to process say 300K a year is no big deal. Mentioning to them that you expect to have fast growth and want the flexibility to process as high as you need to go is good as well. Talk to them. They will find the best solution for you. With most merchant accounts limits are not solid meaning orders will not shut off just because you pass your limit. But choose a reasonable limit... you might say $50k a month to start and then if you get close to passing that mark or are planning a big promo just contact your merchant provider and let them know.

Most people over estimate when applying but some people under estimate too its not a big deal :-)

[SeanyG]

Great info Josh!

You're clearing this issue up for a lot of people!

One other question... For those of us that aren't that technically savy, how hard is it to setup? I know nothing about how to integrate a shopping cart, gateway and bank account.

How much more work goes into managing your own gateway / shopping cart compared to a payment processor?

One of the few benefits of going with a payment processor seems to be that they take care of everything. The time investment of running a system like 2checkout seems minimal....

[Dean Martin]

Originally Posted by SeanyG

Great info Josh!

One other question... For those of us that aren't that technically savy, how hard is it to setup? I know nothing about how to integrate a shopping cart, gateway and bank account.

How much more work goes into managing your own gateway / shopping cart compared to a payment processor?

One of the few benefits of going with a payment processor seems to be that they take care of everything. The time investment of running a system like 2checkout seems minimal....

If you can figure out html code you can figure out the api settings to make your shopping cart / gateway work together. Plus you then have so much more flexibility. Actually, you could use a simple signup form and include the api code to your gateway and not worry about the full cart. As I understand it you only have 2 products?

I use ECHO for processing - gateway is free. I'm not sure if they're in Canada though.

[JMLebeau]

Superb infos right here, thanks a lot Josh, I'll be contacting you very soon.

[Istvan Horvath]

Both InternetSecure and Merchant-Accounts.ca - U.S & Canadian Merchant Accounts offer merchant accounts AND gateway for Canadian businesses (no affil).
I have no experience with them - just have the info.