To do business on the Internet and accept online credit card payments, e-commerce merchants need both a merchant account and a payment gateway. The gateway secures the transactions and collects CC authorization numbers, guaranteeing that you (the merchant) will receive payments from your customers’ credit cards. The merchant account works with an acquiring bank to convert authorizations into cash, depositing the money directly into your business’s bank account. But does it matter which of these two providers you contact first? Yes, it does matter (unless you don’t care about saving money, and if that were the case, you wouldn’t be reading this!)
Payment processors (merchant account providers) usually act as resellers for payment gateway providers, and vice-versa. So either one can usually provide you with the other’s services. But since most credit card processing costs (discount rates and per-item fees) are paid through the merchant account, you can save more money if you start by shopping for a payment processor who offers great rates. Once you’ve found your processor, let them establish your new payment gateway (with Authorize.net or another reputable gateway provider.)
Recently, I was contacted by a fairly large e-commerce business with first-year sales of about $4 million. They’d been in business for just under one year. In their haste to go live, they’d accepted a bad rate plan from their local bank. After a successful first year, they were ready for a better deal and better service. Because they’d been using Authorize.net since the beginning, they contacted Authorize.net and asked for help finding a new merchant account. Authorize.net was more than happy to oblige. Soon, the business received contracts for a new gateway (from Authorize.net, of course) and a new merchant account (from an Authorize.net “preferred partner.”) They found me just before signing the contracts. Not only were the discount rates and fees still too high, but the Authorize.net fees were high, too! I was able to set up a new merchant account and a new Authorize.net account, saving the merchant an additional $1,500 per month.
Based on my experience as an e-commerce business owner, Authorize.net is the best payment gateway available. I recommend them to nearly all my e-commerce merchants. But if any processor or agent insists that you use their preferred supplier, hold onto your wallet! Suppliers typically pay fees to be listed as “preferred”, and that usually results in higher costs for you, the merchant.
If you think you may have been the victim of an inside deal like the one I described, call me. I’d be happy to take a quick look at your statement. If it turns out that your gateway and merchant fees are reasonable, I’ll tell you. But if there’s room for improvement, I’ll tell you that, too.