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Credit Card Merchant Processing

Being an online company, the vast majority of our income comes from online credit card processing. When we were first getting started, it was a bit of a mystery of how to start accepting payments. So we thought we’d pass along some suggestions.

For an online company starting out, begin by accepting cards with PayPal. Once you get to a few thousand dollars a month, it’s worth looking at your own merchant account – the ability to charge cards directly through a payment gateway like

Credit card processing is a bit of a risk for a merchant provider. It only takes a couple days for the actual funds from a batch settlement to reach our bank account but it can take much longer. This is great for cash flow purposes since we accept a year’s worth of fees upfront. It makes abuse and forecasting a lot easier.

In the event of a fraud, the merchant has almost no recourse in the case of a disputed charge or chargeback. In our case, it works well since we terminate the services when this happens. Any of the credit card networks like Visa, Mastercard, Amex, or Discover are not at all liable for fraudulent purchases since the charges get turned around to the merchant. That’s why you don’t see anything more secure for cardholders. It’s a huge investment to develop security in processing but with little or no return. Merchants would love it though.

There are several payments that we do not accept: wire transfers, ACH, and PayPal. Wire transfers are prohibitively expensive. Even in huge volumes, wire fees would eat up the majority of the service fees that we charge for DynDNS service fees and a good portion of DynECT service fees. ACH/echeck suffers from the same problem that a check does: the validity of a check is not guaranteed. A payment may post but be returned weeks later. That introduces an asynchronous process since we have to go back and verify that a payment was still good which is too much work to be cost effective. We have accepted PayPal in the past but we now receive better rates so we do not need it.

You can either have an anonymous or known relationship with your provider. If you do decide to have non-anonymous contact with a payment processor, we would suggest Merchant Express. Run by a former electrical engineer, the company is full of people who know how processing works and how to fix things when payments don’t work. Invariably, something happens – whether it is an issue with certain international cardholders or navigating the money flow through the various parties. If you want to try them out: click here.

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