In the digital age, we often hear about the transformative power of e-commerce and how it levels the playing field for businesses of all sizes. Indeed, even the smallest family-owned businesses can compete with industry giants and earn a respectable income. One key to this competition is the ability to accept online payments, including credit cards and online checks. However, the process of setting up these payment systems can be fraught with pitfalls, particularly for those who fail to read the fine print.
The ability to accept online payments is crucial for any e-commerce business. When a customer decides to make a purchase, the window of opportunity for them to complete the order is quite narrow. If you can provide a seamless online payment process, you significantly increase your chances of securing the order. Conversely, if the customer has to go through the hassle of writing and mailing a check, there's a "cooling off period" during which they might change their mind.
To accept online payments, you need a merchant account. This is where some businesses run into trouble. You might receive an unsolicited email offering to set up a merchant account for you, promising to accept credit cards and checks on your behalf and deposit the money into your account within two working days. They might even offer a seemingly irresistible deal, waiving the usual setup fee and charging only a small percentage of each sale.
Consider the story of a business owner who fell for such an offer. He failed to read the fine print and ended up authorizing a non-refundable security charge and a setup fee. He processed $1,500 in charges through the new system, but the money never appeared in his bank account. When he contacted the company, he discovered that they were merely an independent sales agent and the setup fee was actually a referral fee. The company was evasive about the security charge and unresponsive to his inquiries about the missing funds. Eventually, they cancelled his account.
The business owner was left out of pocket for the referral and setup fees. According to the fine print, the company could hold his money for 180 days. Whether he will ever see his money again is uncertain, especially if the company goes out of business in the meantime. Meanwhile, his money is likely earning interest in an account, benefiting the company rather than him. Even if the company eventually pays him the withheld charges, they have technically acted within the law.
To avoid such scenarios, it's crucial to ignore unsolicited emails promising to process credit cards on your behalf. These are often independent sales agents who can't bind the actual company to any promises. Do your homework before signing up with a company. Find out how long they've been in business and try to get contact information for some of their clients. Most importantly, read the fine print. Better yet, have a lawyer review the contract.
In the world of e-commerce, the ability to accept online payments is indeed a game-changer. However, it's essential to approach this aspect of your business with caution and due diligence. Always remember to read the fine print.
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