Merchant Banking Sucks

This may not be applicable for everyone in all situations, but I got a merchant account in a few days with not too much effort, by simply going to my local bank and talking to someone. They put me in touch with their regional person in charge of merchant accounts. That person asked me a few questions, then came out to my local branch a few days later. She asked me a few more questions while we sat in a conference room, had me verify information, and then we were done. I had the merchant account details within the week, ready for API integration. My short term need for it went away, but I'm planning to integrate it as an option on existing sites next month.

Online applications were ridiculous, and the "oh you can't sell subscriptions" thing was crazy too. I had the exact same experiences Rob did. But those were all people over a phone.

I went to my local bank - they knew me, knew my history, asked for a bit of paperwork to verify existing sales, and we were off. Now... I'd asked what they'd have done if I'd had no sales. She said they'd likely still approve me based on my banking history, but my rate would be higher, but in all likelihood it would go through anyway. Talking with a real person who was in charge of making decisions like this, she explained they had the power to set up all sorts of edge-case merchant account scenarios for people, all various combinations of transaction and monthly fees. Most people just don't investigate their options enough.

To be fair, they could/should have more of this process on line - I didn't think I'd want to go through a manual human process. But... they made it pretty quick and painless.

I work in both setting up merchant accounts and offer PCI compliance services. Penetratation testing and something called the SAQ WIZARD which makes the SAQ understandable.

The pain involved is high here are some quick tips:

1) most new startups might as well forget about applying. Unless you have prior trading history which you can prove your chargebacks are < 1% then you will most likely get a NO.

2) The business volume should be at least 5K + per month to make if worth your while (and theirs) and figures below this will probably not be worth their while = a NO.

3) Trying to get a good rate is only going to be possible if your a mum a pop store selling shoes etc., anything online will generally be high risk and have fees north of 3.5 %

4) if your transaction value is high > 500$ + then you will be high risk.

5) anything travel = high risk

6) video, gambling, adult, coupons, gift vouchers, warranties, etc are all a general NO.

7) dating = very high charge backs, block every Proxy IP and non UK non USA. Or all markets you are not targeting.

8) PCI compliance is easy if you use the gateways checkout page, However, if you want to incorporate payments direct into your own site, thus using the API (needed for recurring billing or for repeat clients where you don't want to ask for card number again and again) then PCI compliance is a big task, making sure your servers can pass about 3k5 tests and about 400 questions and standards adopted as part of the SAQ (self assessment questionnaire) + you will need to make sure your app is secure from sql injection etc. etc.

Am I the only one who thought the article would be about: http://en.wikipedia.org/wiki/Merchant_banking

Based on the title of the post, which is different than the original article?

I had a similar experience. Between all the back and forth it took me about 4 months when getting the merchant account for Genius Pool (http://geniuspool.com/). For background, this site is not meant to make a ton of money -- I just wanted a job board as an option for the podcasts I do.

I tried to get the merchant account set up while building the site. When I tried my bank (BOA), they wanted a fully functional site before they'd think about looking at an application. That wasn't going to work since the site wasn't done yet.

I went with TrustCommerce for my gateway and the rep there referred me to someone for the merchant account. He had me do an application and submit it. After a week or two he said they needed "marketing materials" like a brochure and flyers. I made some marketing materials and let him know the podcasts were the primary marketing materials. Application denied due to marketing materials.

Next he said he could try a different processor. I go through the whole application process again. It takes many weeks during which I keep getting emails back needing some other piece of documentation. During this time I had contacted Braintree who said they could approve me with X,Y, and Z, and it would take about 7-10 business days to get me all set up. They were very explicit about what exactly I needed. The only downside was that it was going to be a relatively high minimum every month.

I told the first guy to cancel the application and then it was approved if I still wanted it. Plus all setup fees would be waived. I went with them because fees were lower as were monthly fees.

However, I wish I had gone with Braintree. Their service was top notch and I wasn't even a customer. If I knew I was going to be processing at least their minimum I would have gone with them. With that said, my current setup works and I've been very happy with TrustCommerce.

Could you possibly elaborate on why you went with PayPal as opposed to Google Checkout or Amazon Payments, what with having experience with all of them?

This smells like bs. paypal is one of the worst companies ever to have to deal with, both as a merchant and as a consumer, and their policies are horrible pretty much across the board. I'm sorry that you had bad experiences with authorize.net, but we've used them for years without issues. We started by using paypal's pro merchant account years ago but they would refuse to accept about 2-5% of our credit card transactions for unknown reasons. When we finally hooked up with authorize.net the payments all went through.

paypal may be better in certain circumstances, but overall it's not a great leap forward and really falls short of its potential. But what do you expect from a startup that was sold to a large company like ebay? they were doomed to be mediocre as soon as they decided to sell out.

Yeah, merchant accounts are a pain to get, but there's at least partly a good reason for that. Consumers can charge back a long time after the charge--a ridiculously long time. If you can't pay a charge back (you are out of business, for instance) the merchant bank has to pay it.

Given that, it is not surprising that they want a lot of information about your business.

Authorize.net has been a thorn in my side on multiple occasions. Absolutely horrible, god awful customer support, and their departments are so disconnected that you can't get anything done without an additional fax, email, and a prayer.

The fees weren't horrible, but I'm very happy to be rid of the company behind them.

If I don't want to use Paypal, what are my best options?

s/Merchant //;

Modern banking is festooned with an array of regulations and legal restrictions, not all of which are helpful in the modern age.

One of the exciting things about underground currencies like Bitcoin is a freedom to experiment with new banking techniques, impossible to implement with "real money" like dollars because of the regulations and paperwork. While technically bitcoin et al may fall under guidelines for foreign currencies, the likelihood of enforcement is very low, unless btc gets serious mainstream traction (i.e., in your dreams).

Our current banking platforms are horribly obsolete and disjointed. In the day of ecommerce everyone wants an online store and needs a merchant account. A good demo banking platform with btc can light the way.

This is pretty interesting... We haven't seen that to be the case at all for companies that use http://feefighters.com. Also, the merchant account fees (even for the smallest of accounts) on FeeFighters are significantly lower than what this guy has reported.