Merchant Accounts Make You Appear More Professional

One of the biggest issues among people who do business online is how to accept credit card payments from their customers. In the past many of the internet gurus encouraged people to open up a merchant account to accept payments online.

Most internet marketing experts contended that having a merchant account made your online business seem more professional. The internet gurus often frowned on online business owners who used free online payment processors like Paypal.

Merchant Account Plus No Customers Equals Problem

The problem with having a merchant account is the monthly fees associated with merchant accounts can quickly add up. This is especially true if you are a person just starting out online and have little to no customers.

Furthermore, online merchant would need to incur more monthly costs for an online shopping cart provider. In order for a credit card transaction to take place on a merchant’s website they would need some type of shopping cart, like 1ShoppingCart, to facilitate the transaction.

Merchant Account Alternatives Available

Fortunately, there are several alternatives that you can use to accept credit card payments online. Contrary to what you may believe, many successful online merchants utilize these online payment methods as opposed to a merchant account.

Here are 8 ways that you can sell your products and services online without a merchant account.

  1. Paypal
  2. 2Checkout
  3. Stripe
  4. GoogleCheckout
  5. Checkout By Amazon
  6. Clickbank
  7. PayDotCom
  8. Sellfy


Credit: Paypal Payments

Paypal, who happens to be the innovator of online payment processing industry, has three options that online business owners can use to accept credit card payments. The three plans that Paypal offers is the Standard, Advanced, and Pro.

The Paypal Standard, which is the most popular, is free to use. All you have to do is sign up, go through the verification process, and then you can begin to accept payment. One of the nuances of using the Paypal Standard option is that when customers make payments they leave your site. During the payment process customers will actually go to the Paypal site to complete the transaction and then are directed back to your site.

The Paypal Advanced and Pro options allow your customers to complete the entire transaction on your website. However, these plans cost users $5(Advanced) and $30(Pro) per month. The Pro plan allows for you to accept and process fax, phone, and mail orders. Manually entering in a customer’s credit card information is not allowed under the Standard and Advanced plans.

All of the plans, which is how Paypal makes the bulk of their money, charge transaction fees. The standard transaction fee is 2.9% + .30 cents. There are also discounts available for merchants who have higher sales volume.

While you can utilize the Paypal’s premium options, the free plan is perfect for someone who is just getting started selling online.


Credit: 2CheckOut

2Checkout, which is very similar to Paypal, offers a simple pricing structure for its users. They charge 2.9% + .30 cents for each credit card transaction processed.

Applying for an account with 2Checkout involves a $10.99 application fee. Similar to Paypal, when your customers make purchases using 2Checkout they are sent to the 2Checkout to complete the transaction. When the transaction is completed your customer is redirected back to your website. 


Stripe Payment

Stripe is fairly new online payment processor that is similar to Paypal. The cost per credit card transaction is 2.9% + .30 cents which is in line with their competitors.

There is a ton of flexibility using Stripe including being able to manually enter your customer’s payment details, which is not allowed through most online payment processors. You are even able to fully customize the look and feel of the payment process. Other than adding a customized logo or header, there is not much customization allowed with most payment processors.

Unless you are comfortable with coding and computer programming, then you may after to hire someone to set up Stripe. Your other option would be to integrate with some type of shopping cart software.

Payments from any sales made through Stripe are deposited in your bank account within 7 business days.

Google Checkout

Google Checkout
Credit: Google Checkout

Google has even gotten in on the online payment processor act launching their Google Checkout service. The fee that Google Checkout charges per transaction is 2.9% +.30 cents.

Google Checkout also offers free fraud protection which protects sellers from fraudulent customers. Unfortunately, many online merchants have to deal with additional fees because of a chargeback or fraudulent transaction. Google Checkout’s fraud protection helps to merchants get paid even if the transaction results in a chargeback.

Video Explaining How Google Checkout Works

Checkout By Amazon

Amazon WebPay
Credit: Amazon WebPay

Amazon, like Google, has come up with their own online payment processor for merchants to accept payments online. The fee that Checkout By Amazon charges per transaction is 2.9% + .30 cents.

There are some great benefits in using the Checkout By Amazon service. Firstly, you will improve your sales conversions because Amazon customers, and there are tons of them, payment info is stored. This means that your customers, who have done business with Amazon, will not have to go through a long check out process.

Another thing that makes Checkout By Amazon unique is that customers do not leave your website in order to process your transactions.

One of the drawbacks of using Checkout By Amazon is that you will not receive any payments until after your product or service has been delivered. According to Amazon it could take as long as 14 business days before your receive payment.


Credit: ClickBank Payments

Clickbank is very popular among online merchants who sell digital or downloadable products. One of the main reasons why Clickbank is so popular is because merchants have access to an army of affiliate marketers. Essentially, if you have a product listed on Clickbank affiliates can promote your product in exchange for a sales commission.

In order to list a product on Amazon you will have to pay a product activation fee of $49.95. You are charged 7.5% + $1 for every sale that you make. While the transaction fee may seem kind of high you should keep in mind that you have access to thousands of affiliates, they play a huge role in your customer support, and they handle making affiliate payments to affiliate who promote your products.

In addition to the transaction fees, you will be responsible for affiliate commissions for every sale made by someone promoting your product. In order to attract affiliates to promote your products you will need to offer commissions between 50 and 75 percent of each sale.

So basically if an affiliate was to make a sale your total cost of the sale would be 50% (or whatever commission percentage you choose) plus 7.5% + $1. Some people may balk at this but you must agree that 75% of a sale is better than 100% of no sale.

One of the drawbacks of using Clickbank is that you have to wait to receive payment from any sales that you have made.


Credit: PayDotCom Payment

PayDotCom, which was created by Mike Filsaime who is well respected internet marketing community, was created to compete directly with Clickbank. PayDotCom, like Clickbank, gives online merchants access to an army of affiliates.

One of the main benefits of using PayDotCom is that you do not have to wait to be paid. Every time you make a sale through PayDotCom your funds are instantly transferred to your Paypal account. With PayDotCom you will need a Paypal account in order to get get paid.

PayDotCom, unlike Clickbank, allows you sell your first product without any type of product activation fee. If you want to sell multiple products, then you will have to pay a one-time fee of $29.

As far as the transaction fees are concerned, PayDotCom charges a flat rate between $1 and $3, depending on the selling price of your product, plus the basic Paypal transaction fees.

In addition to the transaction fees, you will have to pay affiliate commissions to any affiliate who refers a sale.


Credit: Sellfy Payments

Sellfy is a new online payment processor that allows you to sell and distribute digital or downloadable products. The thing that makes Sellfy so unique is the fact that you do not need a website to begin selling. You can actually market your through any channel like Twitter or Facebook with a simple link that Sellfy provides for you.

Another amazing feature that Sellfy has is you can give your customers discounts on your products if they share your link via Twitter or Facebook. This powerful feature alone can allow your product to go viral.

Sellfy, which integrates with Paypal and Stripe, charges 5% fee on top the fee (2.9% + .30 cents) that Paypal or Stripe charges. 

Video Explaining How Sellfy Works

Special Notes

  • Many online merchants use online payment processors in combination with a merchant account. Using this type of strategy may increase sales conversion rates if your customer has different payment options to choose from. 
  • Some of the selling platforms and online payment processors mentioned within the article can be integrated. For example PayDotCom and Paypal or Sellfy with Paypal. This is not uncommon.

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