Setting Up for Merchant Sales

[Norm Bell]

Folks - I have been "lurking" in the background of this forum for some time. I have loved photography for roughly 50 years, and finally worked my way up to LF about four years ago - specifically landscapes. I have thoroughly enjoyed learning from everyone on this site.

I finally decided to apply for juries fairs, and was accepted to one that took place in May. I have just been accepted to a second one that, unlike the first one, I need to be able to take payments directly for anything I sell (the first fair collected payments, took their commission, and sent me a check for the difference). I talked to my bank about setting this up, and was surprised at the cost - about $35/month with a one year agreement - I thought rather expensive. I then looked on line, and have been overwhelmed at the information on the internet . I was wondering what others are doing along these lines. Any help would be greatly appreciated.

Thanks
Norm

[Geary Lyons]

Norm,
Merchant Accounts for small, infrequent payments are costly. The bank and the processor have costs just keeping the account open and online, whether you process a transaction or not. There is the cost of a terminal, as most processors do not allow paper transactions. The wholesale interchange rates are lowest for "card- present" electronically "swiped" transactions. You can use a virtual terminal product, on a computer, but the underlying interchange rate is higher for keyed transactions.

The underlying credit/debit card interchange rates are the same for every processor. They rates are set by Visa, MasterCard, the other card brand and the regional debit networks. How these wholesale costs are passed to the merchant, along with mark-up varies significantly. A profitable merchant portfolio, for a bank and/or processor, requires millions of transactions. So, obviously, the more transactions and higher dollar volume a merchant has, the lower the overall cost per transaction. Just as industry perspective, small merchants process $100,000 to $1 MM in transactions annually. Accounts that process less than $100,000 are very expensive due to the fixed costs and few transactions to drive down the variable cost per transaction.

If you have a strong business relationship with a bank and they handle the acquisition of merchant accounts, rather than contracting with the big processors to handle acquisition for them, then you may be able to negotiate a slightly better rate. The online sources cater to smaller merchants, but the rates are high, there are substantial fixed costs, ( costs whether you process a transaction that month or not), and, unfortunately, lot's of "hidden" costs generally buried the Terms and Conditions. The lowest "rate quote" may very well be the highest overall cost.

PayPal probably has the best overall, merchant program for low transaction count, low volume merchants. The costs per transaction may seem high, but when you calculate all the fixed and "got'cha fees" elsewhere, PayPal is really competitive and offers far more payment options.

Hope this helps,

Geary

[Dave Parker]

Another one to look at is propay.com I have had an account with them for a few years now, and they also cater to small merchants, they charge a yearly fee, as well as a transaction fee., but I use paypal for most things, their processing rates are a bit higher, but they don't charge a monthly or yearly fee for a simple business account, what I like about paypal is you can get a debit card and normally your funds are available right away, depending how they pay you, and if you get the debit card and set it up correctly, you can get between 1% and 1.5% rebates on your debit card purchases.

I have had traditional merchant accounts and if you don't do a lot of volume the monthly and yearly fee's will kill you, but the paypal has worked out for us in the various business's we own.

Dave

[Jon Shiu]

Hi, I have used paypal's virtual terminal service where you enter the info online and process the transaction on your PC. I had to write down all the customers info at the art show, such as name, address, phone no., cc company and no., and security code. Then, when I got home, enter all that stuff in the computer to process. At an art fair you probably won't have access to the internet, so it makes it somewhat more complicated.

If you want regular merchant account with a card swiper you would either have to have access to a phone line, or approval by voice line, or write the info down on the forms and process later. A few years ago, Costco offerred a low cost merchant account. You can buy the card reader/keypad used.

Jon

[Norm Bell]

Geary, Dave and Jon - thanks for the quick feedback. I'll look into paypal and propay.com.

Norm

[Dirk Rösler]

Hi, I have used paypal's virtual terminal service where you enter the info online and process the transaction on your PC. I had to write down all the customers info at the art show, such as name, address, phone no., cc company and no., and security code. Then, when I got home, enter all that stuff in the computer to process. At an art fair you probably won't have access to the internet, so it makes it somewhat more complicated. Jon

An iPhone application would be perfect for this...

[mccormickstudio]

Hi Norm -

I would recommend looking into google checkout or paypal. Google checkout has slightly lower fees.

One strategy (if you have or are planning a website) would be to have a google checkout link on your website and process transactions online through your website. You might also gain sales by referring people to your website after the fair (with a business or postcard) if you can't make the sale at the fair. If you don't have a website, paypal can easily process these transactions on their website. You would need a laptop computer and a PC card wireless modem ( AT&T calls these LapTop Connect Cards) to do this remotely at shows. You could probably find a used laptop very inexpensively on ebay, but the cellular modem will have a cost.

I know other photographers who are using this system for fairs/shows, and the immediate on-site sales seem to outweigh the cost of the cellular modem service. Plus, of course, you have internet access anywhere you can get a cellular signal. I also know individuals who are still using the carbon credit card slips which I have no experience with - I guess you mail them in after the show? Maybe that's an affordable option.

One site to look at as a model which uses google checkout is 20x200.com.

Good luck!

[gevalia]

I was doing some software development work on the Micrososft Windows CE systems a few years ago (handhelds). They have wireless setups, biometrics for fingerprint logons (security for your use), and I did run into a wireless CC swipe which was being used in restaurants.

Here's 1 example. It's expensive but I do remember seeing cheaper packages in the past. You might want to try a google search and look.

http://www.jmsoftware.com/BundledPackage.aspx