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How to get started in the business
of selling and servicing merchant credit card accounts to online
retailers.
Dear Small Biz Adviser
I read your report on merchant card accounts. Can you give information
or contacts on obtaining a commission to sell and service Merchant
Card Accounts to online retailers?
Darryl
Dear Darryl:
As a business planner, my work requires researching many types
of ventures for which I have no experience. And this is one of them.
My only experience in the credit card business is as an end-user
who needs to be disciplined when saying, "Charge it." So I had to
become your personal researcher for a day.
I can begin by noting recent published reports
indicating Visa has begun to take a more serious look at all applicants.
Apparently, there have been a higher-than-normal number of customer
charge-backs from Internet storefront sales. The lack of hard copy
signatures from the customer seems to make it easier to cancel the
sale.
Those published reports also suggested Visa
and MasterCard will begin showing more preference to applicants
who maintain brick-and-mortar storefronts in addition to Web stores.
The apparent intent is to target more stable enterprises with walk-in
sales that were in business prior to the flood of new online storefronts.
Granted, you're looking to sell the account
services, but knowing the market trends, even from the dual standpoint
of the customer and credit card companies, is valuable to your marketing
strategies.
Bankrate's SmallBiz Finance channel has written
a package of stories
that look at the accounts from the viewpoint of the merchants you
want to target. In this business you would definitely be labeled
a "middleman" (middle-woman?). And there appears to be lots of pressure
on you to identify merchants who would qualify for the merchant
card accounts. On the other hand, the merchants will scrutinize
your customer service.
Furthermore, I learned that many banks do not
issue merchant credit card accounts to Internet-based companies.
Apparently, they have taken the Visa and MasterCard matters into
their own hands. After all, they are the primary funding intermediaries
between the credit card companies and the merchants.
My Internet search landed a few sites that offer
people like you the opportunity to make commissions on selling these
merchant accounts. Here are a few of those hyperlinks:
- Howtosucceed.com
offers commissions of $75 to $150.
- AIS
Media promotes a no-cost affiliate enrollment and commissions
of $175.
- CreditCardProcessor.com
has a neat little counter that shows online credit card sales
for the year 2000 in real-time mode.
This is only a sample. There are so many Web
sites to view and investigate.
Finally, I took a tour of the Visa
Business Resource Center, MasterCard's
For Business page, American
Express' Small Business Page and the Discover Card
Merchant center.
Visa strongly promotes online merchant accounts,
while MasterCard doesn't. American Express offers an affiliate program,
if you don't want to sell merchant accounts, and also promotes online
merchant accounts. I found no mention of online merchants at the
Discover Card site.
Therefore, it appears you are considering a
venture continuing to show strong growth. Secondly, customer service
is going to be a critical factor in your success. You have many
online sources from which to choose a partnership. Many appear to
be actual processing centers for credit card charges. And, from
one degree to another, the major credit card companies are competitors.
One last thing -- I don't suggest you promote
your sales in the form of e-mail mailing lists. I would urge having
a Web site from which to promote your business. I for one am very
quick to delete spam without even reading it.
Bankrate.com writers base their answers on our editorial
content and advice of financial professionals. We make no claims
or representations about the accuracy, timeliness or completeness
of such content, advice or the answers provided to you. Our content,
advice and answers are intended only to assist you with your financial
decisions. However, by its nature such information is broad in scope.
Your financial situation is unique, and our content, advice and
answers may not be appropriate for your situation. Accordingly,
we recommend that you get different opinions and seek the advice
of your accountant and other financial advisers before making any
final decisions or implementing any financial or investment strategy.
-- Posted: June 13, 2000
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