Accepting Credit Cards

Re: [spiers] Accepting credit cards

Long ago I was teaching a class, with a part on payments in int'l trade, and
after my long involved discourse on letters of credit, a young woman said, "why
not just pay with a credit card?" I was offended, but I wasn't sure why.
Credit card? In international transactions?

Well, that is why I teach... someone will say something completely off the wall,
which turns out to be right on the money. And I learn.

Paying by credit card is not odd at all when int'l transactions at the small biz
int'l trade level may only be in the $5000 price range, and credit cards
commonly come with $10, $20K and even 50K credit lines. I've declined offers of
$100,000 credit cards.

And with frequent flier miles on a credit card, make a few payments and visit
the supplier for free.

I am sure in retrospect part of my displeasure with credit card int'l payments
had to do with the fact that I had invested so much time and effort in learning
about letters of credit. If credit cards become common in int'l trade, then all
I know about that topic is obsolete. I hate it when that happen!

Not too long ago Forbes had an article where VISA is working on the means to
handle commerce transactions up to $10 million (or more...don't quite recall).
Letters of credit are a nice profit center for banks...traders expect to pay a
hefty premium for the service... if VISA can get some of that biz, it can offer
it at a lower cost yet pick up some nice margins.

Of course, selling to retailers who pay by credit card is common now, and the
possibility of selling directly to the public is a possibility with a merchant
account.

Now, as to Costco vs. Wells Fargo vs. First Intestate Bank, a few things you
should understand. A credit card merchant account is like a loan to you. Your
ability to claim you've had sales on a merchant account means you can claim to
have that much money in the bank. A merchant account is like a loan to you,
from the bankers point of view. And it takes time to find out if you are being
fraudulent.

So, not everyone will qualify for a merchant account (ability to accept visa
mc).

Those who do qualify range from very risky to no risk. Venues where the card can
be accepted range from risky to not risky. Internet sites are considered risky.
Museum gift stores are not risky. The very risky will give up a substantial part
of their sales to the bank for the service.

Major banks tolerate the least risk. Costco is actually brokering merchant card
services for various banks, who compete for your biz, like a mortgage broker
selling a loan.

If Wells Fargo turns you down, they may recommend you try Providian (?) or some
other bank that takes risky clients but charges massive fees.

(If Costco offers you a Providian merchant account, it is because Wells Fargo
told them NO on your account.)

If one of these people turn you down, you should quit trying, because there are
more credit card providers out there, but they are a kind of bottom-fisher thats
prey on the weak.

These bottom-fishers cannot really get you a merchant account, they simply run
your sales through THEIR OWN merchant account, and take so much in fees that you
go out of business.

Yes, costco offers a good price, but I have mine with a major bank because the
money moves into my accounts instantly, simplifying accounting, processing is
more reliable and certain.

Although I argue against and ecommerce site, if you are intent on getting one,
I'd recommend that you first find out if you can get a merchant account (simply
apply thru your bank) and then try out www.store.yahoo.com where you can get a
ecommerce site equal to amazon.com in functionality and power for $49.00/month
complete. In fact, you can get on free for 30 days to play with if you like.
check it out.

John

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