5.2 Third Party Merchant Services

Rather than build and maintain their own site, many small companies use third-party services which offer a customized site with integrated online payment facilities for a monthly fee. Commission charges are generally higher, but the services provide an excellent means of starting up or testing the market for some product or service.

Service

Start Up Fee

Monthly Fee

Transaction Fee

Amazon

Merchant

Services

None

None

From $0.30 + 1.9%

Design

Network

Solutions

None

From $29.95 for 25 items

None

eBay

Free for 50 insertions/month.

Otherwise insertion fee based

on category and reserve or final price

None

Sliding scale fee based on final price

realized and shipping cost.

HandzOn

None

From $19.96 for 5 items

PayPal enabled.

Yahoo

Merchant

Solutions

$0-50

from $39.95

0.75% to 1.5%

Questions

1. What are the pros and cons of merchant services?
2. Model the profit margins of two hypothetical products to find when it would be wise to move from merchant services to Internet payment providers and/or an Internet merchant account.

Sources and Further Reading

Need the references and resources for further study? Consider our affordable (US $ 4.95)  pdf ebook. It includes extensive (3,000) references, plus text, tables and illustrations you can copy, and is formatted to provide comfortable sequential reading on screens as small as 7 inches.