How To Select a Credit Card Merchant and Gateway

Selecting a credit card merchant and gateway is not inherently a difficult thing to do. But if this is your first online store, the evaluation process can be a bit daunting due to the sheer multitude of options to choose from. To make things easier, you should always select a credit card merchant that is supported by your shopping cart out of the box.

For example, below is a list of merchants that are supported by OSCommerce out of the box

  • Authorize.net
  • iPayment
  • 2Checkout
  • PsiGate
  • SecPay

Paypal Website Payments Pro is also a popular credit card processing vendor which is supported by a number of popular shopping carts as well.

Description of Potential Fees

The main reason it is hard to evaluate the various credit card vendors is due to the various fees that you have to sort through. I’ve tried to list the different kind of fees that you could encounter below along with a brief description

  • Registration Fee – This fee is charged just one time for signing up for the service. In my experience, you can almost always get this fee waived altogether if you just ask. Make sure you ask, since these fees can be upwards of several hundreds of dollars or more.
  • Discount Rate – This is the percentage that the credit card merchant charges for every transaction. Usually, there’s a set processing fee of anywhere between 10-50 cents per charge in addition to a percentage of the entire transaction amount.
  • Monthly Fee – There is usually a monthly charge associated with using the gateway itself which can range widely across different vendors. The monthly fee can be a bit tricky to evaluate since some companies have higher monthly fees that can be waived if you rack up enough charges in the form of discount and processing fees.
  • Statement Fee – Personally I think this fee is bullshit. Some merchants will charge you a monthly statement fee of between 10-25 dollars. Try and negotiate this one away at all cost.

Why It Gets Complicated

Some companies charge you a minimum fee of at least 50 dollars for the monthly gateway fee. However, if you manage to accumulate more than 50 dollars in processing fees, this gateway fee is waived. But no matter what, you will have to pay at least 50 dollars every month just for the right to use their merchant services.

There’s also a wide range of processing fees and discount fees. Some companies charge a higher processing fee and a lower discount rate. Some companies charge a rock bottom discount rate but charge you a high processing and monthly minimum gateway fee.

Some companies are dirt cheap but they won’t provide you much if any free technical support to integrate your shopping cart. If you need help, they’ll charge you a hefty fee for support.

You will need to decide which plan works the best for you based on

  1. The amount of individual transactions you will process a month
  2. Monthly revenue
  3. How tech saavy you are


In the beginning when you are starting out, you will usually want to find a merchant with a low monthly gateway fee. Chances are you won’t be selling in large volumes anyways so the discount rate doesn’t matter as much. As you generate more and more revenue and you no longer have any troubles making the monthly minimum gateway fee, you can switch to a provider with a lower processing and discount rate.

For brand new stores, I highly recommend Merchant Plus which is an authorized distributor of Authorize.net. There’s a 30 dollar monthly fee which is on the low side and they charge a reasonably low discount rate as well. You’ll find that other vendors may offer lower discount rates but much higher monthly minimums. In any case, based on your financials, you will know when to switch to a cheaper provider when the time comes.

Further Reading

Below are some other articles and tutorials that I’ve written about accepting credit cards online that may be of interest to you.

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13 thoughts on “How To Select a Credit Card Merchant and Gateway”

  1. Marty says:

    Steve,

    In perusing your e-book entitled, ‘Create a Profitable Online Store in 5 Easy Steps’, I see where you referred to BlueHost (which just so happens to be my current ISP) and as such I was somewhat surprised in that you made no mention of ShopSite w/regard to shopping carts nor BluePay w/regard to credit card processing. Are you by chance familiar with either of these services? Reason for my asking is because, after thoroughly researching the subject matter, I intend on using BluePay for my credit card processing and am leaning toward using ShopSite for my shopping cart. Do you by chance have any thoughts or opinions regarding ShopSite vs. Zen Cart? Thank you ahead of time.

    1. Hi Marty,

      Shopsite was not a considered in my ebook because they charge both a license and a maintenance fee. The main focus of the book was on free open source shopping carts, shopping carts that require no license fees or transaction fees.

      In terms of open source shopping carts, I recommend OSCMax or ZenCart for a light weight solution and Magento if you need a fully featured cart. Unfortunately, I’ve never evaluated BluePay but after looking at their website for the last 10 minutes, I was frustrated that I couldn’t locate their transaction fees. Why did you choose BluePay in particular?

      Sincerely,
      Steve

  2. Pete says:

    Hi Steve,

    Have you ever looked at Innovative Merchant Solutions by Intuit? What are your thoughts on it?

    Thanks

    1. Great question Petem, I was actually wondering the exact same thing..

  3. Linda says:

    Hi, Steve. I’m in the process of building my website. I’m looking into payment processing and it is overwelming, confusing, and frustrating. I’m just wondering what payment processor would you recommend to a beginning dropshipper. Do you still feel that using the Paypal Website Payments Pro is the most straight forward in its charges?

  4. Hi Linda,

    It depends on what you value more, simplicity or the lowest cost. As a dropshipper, you aren’t going to be shipping anything (One of the advantages of PP is their multi-order shipping interface), so I would probably advise that you go with Authorize.net because it is cheaper.

    You should do your own research of course, but I’ve found Merchant Plus to be both economical and easy to setup. I also have a coupon code you can use to save 20% off the monthly fee

    coupon code: MYWIFEQUIT

  5. Smth says:

    Hi Steve,

    I have been following your mini course which you have sent me, for that was to further my understanding, if this is the book? I am looking forward to set up my e business.

    I am not pretty sure if all the requirement to set up was only base in US (including company registration). As I am currently not in US, and I am figuring to set up web hosting which is outside of US.

    If the setting and configuring does apply only with or in US (i.e acceptance is only US dollars whichever the mode is, the receiving payment or the payment that I am making for my subsequence monthly fee).

    As mention above, so if I will be setting my e business (Internationally) but I am (will be) based in Hong Kong, should I say: for there will be a differences as the cost pay by my consumer will only be accepted in US dollars rather then acceptance of currency of my present country (for Hong Kong Citizen). Do correct me if I am not getting right about it or What is the alternative?

    1. Sorry. I’m having problems understanding your question. Could you please ask your question in a different way and summarize it in a sentence or two?

  6. This is a great article for a small business owner. I own a small merchant services company, I would be glad to go over fees and business services for anyones company. I have the lowest fees and no gateway fee.

  7. Really awesome work with the blog. I do like your hard work on and will wait for more post as from you as post gave me pleasure and gives some helps to do same work right here. Thanks a lot…………………………

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