You’re setting up to run an Internet based business and obviously need to find a way to take money online. There are a large number of service providers who will allow Internet based businesses to do that. How do you choose between them?

First, there are your local and national banks that provide Merchant Services to businesses. This is generally a costly solution with set-up fees, recurring charges, and lots of hoops to jump through. For many Internet start-ups, these initial costs can be a bit prohibitive, as they have no idea at that stage what turnover they can realistically expect.

If for whatever reason you are unable to obtain the service you need at a reasonable rate from your bank, it isn’t the end of the world. On the contrary, Paypal, Google Checkout, Nochex, Worldpay are probably the best known alternatives, but there are a host of others. Your favourite search engine will have plenty of answers for you.

Once you start checking out their offers and terms and conditions, here is what you have to look out for:

1. Set-up costs for opening the service:
   Some service providers don’t charge, others can charge up to £200 ($300) or even more.
2. Monthly fees:
   These can range from no fees to £20 ($30) a month.
3. Commission per transaction:
   They are usually somewhere between 2% and 4.5% plus a fixed transaction fee (in the UK generally 20p)
4. Remittance charges:
   They can vary a lot from less that $1 to $23 per transfer. These charges can be a killer, especially if the service offers frequent or even daily transfers; make sure you do your sums very carefully.
5. Remittance period:
   This is the delay from the time the money is paid into your merchant account to the time it is transferred to your bank account. Make sure that you are comfortable with the remittance period offered. There is generally some margin for negotiation.
6. Percentage of funds retained:
   Most service providers will insist that you retain sufficient funds in your merchant account to allow for refunds. These are approximately 5% of the total funds taken, which can be held for up to 6 months.

There is no universal rule or best solution that fits all. You need to take a good look at your business, expected turnover, payment conditions and refund rules, and then choose what is best for your business. The best package for you may not always be the one that at first sight appears as the cheapest solution available on the market. Investigate all the pointers to avoid paying over the odds.

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