Best provider for lots of small recurring transactions

[ddaly]

I'm developing a membership-based site that'll cost $10/month, and I want to know which merchant account provider you'd recommend. I already have a merchant account with my other business, but I think I can do better, since the per-transaction fees are $.27 (plus the extra $.10 for the gateway).

My goal is to get at least 400 members at $10/month, so that's a gross of $4000/month. With my current merchant account, the fees would be $268/month, and I'd like to do better. Anyone know of a merchant account that will be better for my purposes, with a low per-transaction rate?

Also, any alternatives to Authorize.net for recurring billing, to avoid the $.10 per transaction?

Thanks for any help.

[abbynelson28]

Please specify you belong to which county since there are different types of merchants who charge differently and according to the nature of business.
If you're based in the UK you're severely limited as to the range of merchant accounts open to you.
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Abby Nelson
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Looking for merchant account

[tomm]

You need to know what kinds of cards you'll probably be receiving:
Visa and MC have over 200 rates ranging from a low of a little over 1% = .10 TX fee to almost 3% + TX fee. If most of your transactions are face-to-face and are personal V or M/C cards, the rates will be lower. If, however, the majority are with rewards (the kind that give you flight miles, etc), or business cards, the rates will be near the top of the range.
These rates are what V and M/C charge your merchant services provider.
You then need to assume that the provider will charge you an additional percentage (usually 1/2 to 1% over what the V and M/C ("Interchange") rates are.
So now you probably paying around 2.8% to well over 4%. But wait - there's more...
To this you then add the "swipe fee" or additional transaction charge that the provider adds to the deal. Your stated rate of $.27 per transaction is relatively high - especially because your average transaction is so low.

Your job is to negotiate in five areas:
1) try to keep the average rate as low as possible (in your case, probably close to 2.4%;
2) negotiate a lower transaction fee from the provider ( $.10 to .15 rather than the $.27);
3) Be sure to try to eliminate or lower all the other periodic fees: monthly, startup, annual, batch, etc that are nearly always hidden somewhere in the statement. These are all negotiable, and are generally put in your contract to raise income for the provider and/or his salespeople.\;
4) Do what you can to get an extended rate guarantee. This should cost nothing, and guarantees that the rates you accept cannot be increased without: 1) an increase in V, M/C rates; or 2) your written permission.
Clue: Any company that doesn't want to grant this guarantee is undoubtedly planning on increasing your fees - usually only notifying you in very small print. This is common to the biggest, best-known names in the industry;
5) Service: a very few companies offer 24/7/365 service. If you'll be using your transactions before or after regular business hours, or on holidays, you will need this. When you need it, you'll really need it.
Since your account is actually a very small one, you will be lucky if you can keep the composite fee (all of the fees, divided by the monthly amount transacted) below 3%.

Good Luck! Do not move ahead without accepting credit cards from somebody, however imperfect. In these trying times checks are going to become increasingly unreliable. Matter of fact, you should accept all cards, including American Express and Discover.
Tom
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