WHEN DO I CHANGE TO A MERCHANT ACCOUNT?

How important is a merchant account? When is 2Checkout or CCNow enough and when does investing in a merchant account and payment gateway make business sense? Charges for doing business with a merchant account vary a lot. Look at the graph: Several things become clear: * 2CheckOut costs look very, very good. In direct costs, the merchant account route is only cheaper at monthly sales of $5,000 or more. * It is unwise to set up a merchant account if you anticipate gross sales under $5,000 per month. Beyond that the merchant account option begins to become cost effective compared to the alternatives. * CCNow, ClickBank and DigiBuy are suitable only for products that have a fairly high profit margin that can absorb the substantial purchase costs of 8% to 14%. This analysis only examines direct purchase costs. The hidden costs are in time and ease-of-use. Our recommendation: 1. If you are just starting out, use 2CheckOut. 2. After $5,000 in monthly sales consider a move to a merchant account/merchant-hosted API payment gateway system in order to save purchasing costs and reduce processing time and costs. 3. Don't "lease" e-commerce services; don't get caught in an unbreakable lease that will pounce upon you if your business happens to fail. Online businesses are too risky in the early stages to sign "lease" agreements. If you can't afford to pay e-commerce set-up fees up front, don't order them.

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