Reselling merchant accounts can be a tricky business. However, if you’re focusing on doing eCommerce, it can be simplified. The following thread will all apply to eCommerce accounts specifically.
BECOMING A RESELLER - Becoming a reseller (also known as an ISO - Independant Sales Organization) isn’t very hard. The two main ways are to sign up directly with a processing bank or to sign up through an MSP (Member Service Provider). An MSP is a company (or it can even be just one person) who pays a processing bank a large sum of money, usually $10,000 per year, to have a special relationship with them. The perks of being an MSP is that you get better buy rates and extra support (plus more). Some processing banks make you go through an MSP as they do not directly sign up ISOs. How you find an MSP or a bank won’t be discussed here (I can provide some info if requested). Once you find a bank or MSP with a suitable program (discussed below) you’ll sign an agreement with them outlining each others’ responsibilities and rates, etc. You then should be provided with the necessary paperwork and tools to sign up new merchants.
HOW IT WORKS - As a reseller, you’ll get a “buy rate” which you can mark up to whatever rate you want to sell your services for. In other words, it’s your cost. For example, if your buy rate is 2.00% + 20¢, you can resell it to your customers at 2.25% + 25¢. So, if your merchant gets a Visa sale for $100 they’ll pay $2.25 to the processing bank. Of that $2.25, you’ll get 30¢ (.25% of the $100 plus the extra 5¢). That may not sound like a lot, but if they crank out $10,000 with 35 transactions in one month, you’ll make $26.75 for doing nothing. Get a few merchants under your belt and now you’ve got a nice recurring revenue stream. Want to make more money? You can also make set fees each month off of the monthly statement they receive and more.
YOUR RESPONSIBILITIES - To sign up a merchant is the only real work a reseller needs to do. Your primary responsibilitiesare to explain how a merchant account works and what its costs are, have them complete the necessary paperwork, assist the bank/MSP in account set up if necessary, and provide the new merchant with their necessary account information. The requirements for setting up a new merchant account vary from processor to processor but they all are pretty similiar. The hardest part here is just making sure you provide the bank/MSP with the proper information they need to set up the account. Usually they’ll require (in addition to their paperwork): a voided business check, a copy of a business license (or two), and a (semi)complete website that they can review. You will also need to know what kinds of accounts cannot be set up (porn, guns, etc…) and which are restricted (electronic sales, subscriptions). eCommerce accounts are generally on the trickier side to set up because processing banks are still a little gunshy about the Internet. You will need to have your ducks in a row to set up an account but don’t be intimidated. eCommerce accounts are set up everyday.
SUITABLE PROGRAM - Just like accepting credit cards means shopping around for good rates, so does being a reseller. How programs are set up can vary so I’ll just cover the main points.
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Buy Rate - Obviously the rates you are offered is key because the lower they are, the easier it is for you to be competitive and the more you can make on your merchant’s sales. A good buy rate for eCommerce is 2.00% + 20¢. That would be a killer buy rate so don’t expect to see those numbers thrown at you often. But, use that as your goal for comparing rates.
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Processing statements - You should make money off of your merchant’s processing statements. A buy rate of $5 a month is the highest you should acceptr. Most merchant statements run the merchant $10 per month so if you get a buy rate of $5 and charge your merchant $10 for the statement, that’s an easy $5 a month guaranteed. Even if they don;t process a dime.
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Monthly Minimum - Ideally you should not be required to carry a monthly minimum. This is a fee that is charged if a merchant does not process enough volume during a month. Basically if a merchant doesn’t process enough to generate $10 in fees (this is calculated from their percentage rate only) they are charged either the whole monthly minimum in addition to their processing fees. Or, they are charged the difference between their monthly minimum and their processing fees. You want to be able to charge whatever minimum you want. This way you can either not have one and be competitive, or charge one and guarantee yourself some $$$$ (you actually get to keep the whole minimum if it is charged. You don’t have to give one penny to the bank/MSP).
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Annual/Membership Fees - These are kinda uncool but are definitely viable forms of revenue. Basically, every year a merchant is up and running with their merchant account, they pay you a set fee. Just like the minimum fee, you get 100%of it. No sharing with the bank/MSP.
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Other Fees - You shouldn’t be charged setup fees. If they’re charging you to setup an account it’s pretty uncool. You’re doing them a favor by bringing them an account (mainly applies to reselling MSPs). Of course you can charge set up fees if you want to.
EQUIPMENT/GATEWAYS - Use whatever you want. But if you resell someone like Authorize.net, you can make money from their gateway also. See their site for more info on this http://www.authorize.net.
There’s a lot more to say, but take it from me, as a reseller myself, it’s not that hard and it’s easy money. I mean, you sit on your a$$ and your customers make you money. It’s not a bad deal.
If there’s something anyone would like me to elaborate on, just say so and I’ll do my best to answer. If I missed anything, feel free to point it out to me. But remember, this is a generalization of Ecommerce accounts. The world ofcredit card processing as a whole is bigger then this!