Payment Gateways Part 3: Cost Comparison

October 28, 2011

The Official Merchant Services Blog completes its three-part series on Payment Gateways. Today’s installment discusses the pricing structure of Payment Gateways and takes a detailed look at the pricing options for the Payment Gateway Solutions that Host Merchant Services offers.

What Are the Costs of Payment Gateways?

The costs that you will have to pay for a Payment Gateway break down like this:

  • Discount Rate
  • Monthly Fees
  • Per Transaction Fees
  • Setup Fee

Discount Rate

A discount rate is the percentage of each transaction that you pay to your card processor for processing your credit card sales. These fees are largely influenced by the percentage that MasterCard and Visa charge processors. Discount rates are usually in the 2-6% range, but do vary greatly depending on the payment gateway/merchant account specifics that you choose.

With Host Merchant Services, you do not have to pay a discount rate for any of their Payment Gateway Solutions.

Monthly Fees

Typically Payment Gateways that require a merchant account charge a monthly fee. It is part of the merchant account application process, and the prices can vary depending on what add-on services you may choose with your account. A very popular add-on feature, for example, is fraud detection. With many Payment Gateways, the merchant is offered a number of tools to help guard against fraud, such as filters to define the scope of people or places you receive payments from. Authorize.net, one of the Payment Gateway solutions Host Merchant Services offers, has an Advanced Fraud Detection suite available. These types of tools can help reduce chargebacks.

Per Transaction Fees

Most Payment Gateways charge fees for each transaction you process. This fee is usually a flat fee and under $0.50 per transaction. There is some variance in how much that fee can be. For example, the Authorize.net option that Host Merchant Services provides with its Merchant Accounts only has a 5 cents per transaction fee. And the HMSExpress option that Host Merchant Services provides is rare in that it has no added frees for individual transactions.

Setup Fee

A lot of Payment Gateway options also charge a one-time setup fee. Host Merchant Services, however, does not charge a setup fee for its Payment Gateway solutions with its Merchant Accounts.

So that’s an overview of the fees that are involved with Payment Gateways. Lined up together like that you get a picture of what the cost of convenience and security could be for your online business. You also see that Host Merchant Services strives to offer competitive rates with less fees than other Merchant Account providers.

Host Merchant Services offers two basic Payment Gateway options: Authorize.net, and HMSExpress. Authorize.net, which is one of the three largest Payment Gateways offered, costs HMS Merchants a base fee of $10.00 a month and 5 cents per transaction. HMSExpress, the new virtual terminal solution that HMS offers, costs its merchants $10 a month and has no added fees for individual transactions.

What Criteria Should Merchants Consider when Choosing?

Here are some factors merchants need to consider when choosing a Payment Gateway. Keep in mind that the overall goal is to find what works for your business, so don’t let this decision overwhelm you.

How many transactions to you expect to process per month?

If you expect a low volume of online payments each month, then you would want to consider avoiding monthly fees and a high setup cost, as it will take you longer to turn a profit.

Do you plan to utilize auto-billing? 

If your business has a need for storing your customers’ payment information, and you need to charge them on a recurring basis, then you need to make sure that you choose a Payment Gateway that gives you this option.

How international is your business?

If your business plans on processing payments from all over the world, you need to choose a Payment Gateway that allows you to do so. Not all options out there can handle international currencies smoothly and seamlessly.

 Don’t forget support.

Technical support and customer support are something you can’t overlook when choosing your Payment Gateway. After considering the costs and the setup, the issue of support becomes paramount for the long-term viability of your processing capabilities. When things go wrong, or when there are issues with chargebacks and fraud, you want a Merchant Services provider to be readily available to assist you. With Host Merchant Services, you get 24x7x365 support available to you. The company has its own fraud prevention specialists available to assist you above and beyond what the payment gateway add-ons can provide. And most importantly, when you call in with a problem you get to talk to a person instead of being routed through a phone-tree maze.

The Choice is Yours

As a merchant you want to find the best service tempered by the most affordable rates, when it comes to your Payment Gateway options. It’s important to consider how important the ability to take online payments can be for your business. It opens you up to a wider customer base. It also gives you fast, secure transaction processing. Feel free to shop around and compare the options available to you, and keep in mind that Host Merchant Services provides Payment Gateway solutions with its Merchant Accounts that have less fees than a lot of the other choices you will come across.

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