Recently, I went looking for an Internet Merchant Account.
My mission was two-fold:
1. Open an account for myself and
2. Research options for my new ecommerce information site
After some research, I thought I’d found an attractive
Merchant Account offered through a reputable reseller. As it
turns out, I learned the hard way that I was wrong.
Fortunately, my experience can help you avoid the same trap.
Based on my own experience, I developed a list of questions
to ask a potential merchant account provider. Understanding
the answers to these questions before signing an application
or agreement will help make for a solid partnership between
you and your account provider.
But first, the story:
My Internet Merchant Account Experience
I found what looked to be a competitive Merchant Account
offered through a program at a popular reseller. Fees were
summarized on the reseller’s site and applying was simple. I
paid an $89 set-up fee, which took me to an online
application I was required to submit to get the process
That’s when things got interesting. Submitting an
application meant agreeing to a previously undisclosed 45
page merchant agreement. An unmentioned termination fee was
buried on page 11.
If I ever cancelled the account, I’d be hit with a $295
termination fee. I knew from my research that the large
termination fee was not competitive with other merchant
accounts and other aspects of the account were not
attractive enough to compensate.
Suddenly, this merchant account was not such a good deal.
More critically, however, the termination fee was not
disclosed before I was required to pay for set-up. I
immediately asked for a refund.
Then things got even more interesting. I was told the $89
fee was non-refundable. I’d seen a footnote that the fee was
non-refundable, but interpreted it to mean only if they
actually did some work and processed an application. I had
not completed an application and did not intend to after
learning of the extra $295.
Using the email support system so I would have documented
proof if I needed it, I insisted on a refund. Still no go.
When I explained there had been no set-up to justify a ‘set-
up’ fee, they responded that the fee was really an
‘application’ fee – non-refundable, as explained in the
footnote on the order page.
Basically, they were telling me I’d paid $89 for a link to
an online application, which I had not and did not intend to
Finally, A Refund
I explained I would not take no for an answer. If we
couldn’t work this out I’d report them to the Better
Business Bureau for undisclosed fees, file a complaint with
my credit card company, and copy the company president on
each. My complaint was sent to the next level.
Finally, after an additional three day wait, the refund was
Avoid An Internet Merchant Account Trap
I made the mistake of taking information at face value and
relying on the reseller’s good reputation in other areas.
To avoid unpleasant surprises such as mine, insist on all
information and agreements up front, before committing to
the account or paying initial fees.
Having all of the documentation may not be enough. Be sure
you understand all aspects of your Internet Merchant Account
agreement as well as fees and equipment required.
If you find incomplete, unclear, or conflicting information,
If your sales representative is more interested in getting
your signature than helping you understand your commitments,
ask for another representative or go elsewhere. There are
many, many Internet merchant account options available. You
need not be trapped into one that is uncomfortable for you.
Based on my own experience, I developed a list of seven
multi-part questions to ask a potential merchant account
provider. Before contacting a provider about fees and
agreement details, you may also want to familiarize yourself
with all of the potential fees associated with an Internet
Merchant Account. There is a list here, about half way down
7 Questions to Ask
Understanding the answers to these questions before signing
an application or agreement will help make for a solid
partnership between you and your account provider:
1. Can I accept credit cards both online and offline?
Do I need to get separate authorizations or permissions when
setting up my account for different types of transaction
(Internet, retail, phone orders, etc.)?
What other additional fees are involved if I accept both
online and offline credit card charges?
2. Can I accept online payments using methods other than
Mastercard and Visa (Discover, American Express, Diner’s
Club, online checks, debit cards, etc.)?
If so, what are the fees and do I need to do anything to
“activate” those payment methods?
3. What are the different discount rates and fees for
different types of charges (Internet, in person, telephone,
4. What are the other fees related to this account – yearly,
set-up, application, monthly minimum, statement, support,
cancellation, discount, per-transaction, gateway access
fees, card reject fee?
Are these subject to change?
Are there any other fees?
5. Do I process charges manually or automatically?
If manually, is it possible to get automatic processing?
If so, do you provide a secure online payment gateway?
How do I do it and what extra charges will I pay?
6. What other software and services do I need to become
fully ecommerce enabled online (such as secure gateway
Do you have a list of compatible or preferred providers?
7. Do I need additional hardware or software?
If so, what is the cost and how do I get it?
Ask these questions and establishing a mutually comfortable
relationship with your Internet Merchant Account provider
from the start. It will help you avoid “traps” and lay the
groundwork for a long, solid partnership.
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