Have you ever started to research something, spent a fair amount of time, only to feel like you’ve made no progress and now your head is spinning? For whatever reason, that is how I have felt (like a crazy person going in circles) when trying to research merchant accounts and payment processors for my business. I have experience with several, but my business is evolving and I began to look into some new options to see if I could a payment option that would be a terrific fit. (And oh, the horror stories once you start researching specific payment processors and merchant accounts!) What I have concluded is that it doesn’t matter which one you look at, there are going to be some very poor online reviews posted about all of them (my opinion only).

But yesterday I listened to an interesting conversation hosted by Digital Marketer, and I wanted to share a few takeaway nuggets.

If you are not aware of the folks at Digital Marketer and you are in online business, you should definitely check them out! I talked with Perry Belcher in advance of a presentation he gave at the Ultimate Millionaire Summit in Lake Tahoe earlier this year. He was dressed to the nines in a gorgeous tailored suit, and both of us stood in front of the mega-coffee-dispenser outside of the presentation room. We began chatting, and I asked him (not knowing who I was speaking with), what his business was about. He told me that he owned a suit shop (which seemed to make total sense based on his appearance). And then five minutes later, he was up on stage blowing my mind with his presentation (covering a gazillion tools for business and online marketing).

And then shortly after, I picked up a copy of Ryan Deiss’ book, Invisible Selling Machine. Ryan is Perry’s business partner, and an online entrepreneur who has mastered the prospect/customer lifecycle and automated marketing.

Anyhow, the Digital Marketer conversation that I am referencing was with a representative of Easy Pay Direct, a business that has created a unique niche as a payment gateway that provides specialty services. Easy Pay Direct helps its clients set up merchant accounts with vendors (and the back-end member banks) that really match their clients’ businesses. Some merchant accounts may be a great fit for a brick-and-mortar store, and not a great fit for an online business that runs several large promotions or launches within a year, resulting in huge influxes of sales at only a few key times throughout the year.

And so much of this conversation talked about the realities of working with merchant accounts, working with the wrong merchant accounts, and what happens if you are a consumer and online entrepreneur who is not aware of the realities and various influences in the credit card, banking, & merchant account worlds. (For example banking policies, or credit card company policies, may change in an instant, with certain resulting terms or changes to business arrangements being dictated to the merchant account providers who then begin locking or freezing accounts, or shutting down accounts related to certain kinds of businesses. All of this can happen on very short notice, and without any notice to the end consumer: you.)

In this conversation, Easy Pay Direct distinguished between payment aggregators (like Paypal and Stripe), and merchant accounts, and shared the benefits of both. With payment aggregators, you may get a quick set-up, and fast access to the tools that allow you to begin making sales, but once your business reaches a certain level (generally around $100,000), even aggregators have to do the underwriting (eventually), that merchant accounts generally do up front. Which is why setting up a merchant account can take more time and be a bit more difficult than setting up an account with an aggregator. Merchant account providers go through an “underwriting” process where they require information about your personal and business credit history, about your business and sales history, current situation, and projected path forward.

And within the merchant account world, you have a lot of variation. There are high risk merchant account services and low risk. Everyone has probably heard horror stories, whether in regards to payment aggregators or merchant accounts, where accounts get frozen mid-launch and suddenly an entrepreneur or business not only can no longer accept payments and continue to make sales, but then their sales revenue is locked in an account to which they no longer have access.

Easy Pay Direct recommends having several payment processor options, which may include multiple merchant accounts, and their services are focused on matching the right vendors with their clients, acting as the payment gateway, while helping their clients get their merchant accounts set up in a way that reduces risk (like opening several merchant accounts). This sounded truly genius to me after my hunt turned me around in circles trying to figure out whether to go the Paypal/Stripe route (I’ve worked with Stripe in the past), or launch forward into a Merchant Account, which also has no guarantees against an account lock-down, and has a higher up-front barrier to entry.

I should note that I am not an affiliate or promoter of either of these companies, but benefited tremendously from this conversation discussing the realities of payment processors and merchant accounts. The resounding message was that you have to make a decision with your eyes open, know and assess your risks up front based on your own unique business, and then do what you can to decrease risks to your business.

One interesting part of the discussion was in response to questions regarding charge-backs and payment disputes. Easy Pay Direct pointed out that a strong, qualified merchant account service will provide guidance to their clients on the importance of well-drafted Terms of Purchase for whatever it is they are selling, as well as a strong refund policy. These things are paramount when it comes to disputing charge-back requests or responding to payment disputes with clients who may be trying to take advantage of their credit card refund policy (up to 6 months after purchase). In almost all scenarios, when there are Terms of Purchase involved, those will be reviewed by the bank or merchant account services in resolving these disputes.

Terms of Purchase, when put in place properly, provide a contractual basis (especially regarding refunds when a refund policy is included) for pursuing certain remedies. Terms of Purchase protect both the seller and the buyer by putting into language exactly what is being provided, how it will be delivered, the refund policy of the seller, as well as additional terms governing the transaction. For any of your regular services, programs or online products, I strongly recommend that you have Terms of Purchase governing the sale to protect your business and to assist you in any future disputes. (And please contact me if you need custom Terms of Purchase implemented in your business. This is one of the legal tools I help entrepreneurs and online businesses get in place.)