Selecting the right credit card payment gateway / merchant account. NZ
The primary decision will relate you whether you already have a merchant account or not, and how many transactions you intend to put through.
If you already have a merchant account in NZ, then you should probably choose DPS, EGate, Paypro ,Paymate, or Paystation as your payment gateway. Their fees range from $10 - $50 per month, depending on the number of transactions you put through. Some banks have arrangements with particular gateways, so you should ask your bank which payment gateway is best for you. Your bank may also charge you merchant account fees depending on which gateway you choose. Remember to add up all the costs when comparing payment gateways. The greatest benefit of NZ banks is that payments are credited to your bank account over night, so you can draw down against that money.
If you don't already have a merchant account, there are some other options.
A good low price option is PayPal, who have only a no setup fees, and a rough average of 3% transaction fee depending on the ticket size of each transaction. Paypal now support many new currencies, including NZ dollars. and they also take a while to pay you. Paypal also don't provide you with your own merchant account, so when the customer gets their credit card statement from the bank, the transaction line will have PayPal written on it.
Worldpay cost about $500 per year. Their 4.5% transaction fee is not that competitive against paypal, but you do get a real merchant account. They enable you to trade in multiple currencies. However, you won't actually receive the funds from Worldpay until after about two weeks
Paymate is a new offering, good for NZ and Australian customers. They do deposit your funds into your bank account within a day. There is a small setup fee.
Established merchants, who can estimate their future online card turnover at more than $10000 per year, should probably choose one of the NZ based gateways, after negotiating a better transaction rate with their banks.
OBTAINING A MERCHANT ACCOUNT
In order to accept credit card payments online, you will need to have a "card not present" merchant account agreement with your bank. This type of merchant account means you will never actually swipe, nor sight the credit card with your own eyes, nor see nor compare the signature during the transaction process.
Merchant accounts and transaction fees are not cheap for 'card not present' transactions. Typically "card not present" merchant accounts cost up to $50 per month, and up to 8% in transaction fees. The transaction fees are higher because it is a greater security risk for the banks with internet transactions.
In order to calculate the most economical price for your merchant account, you will want to have the following information for your bank.
- The average "ticket size": (how much would a typical transaction be? e.g. $25)
- The expected turnover: (how much will your turnover gross each month? e.g. $5000 per month)
- Currencies you want to transact in.
- Other reasons why you will not have chargebacks.
- Other reasons how you validate the authenticity of the customer.
Typically you should contact your current bank for information about obtaining a merchant account. Phone your bank account manager to ask about setting up your merchant account. Someone from the bank's central office will then call you back within 48 hours to discuss your requirements.
If you don't have a merchant account already, or wish to transact in foreign currencies, then there are overseas payment gateways that can provide you with merchant account, e.g. WorldPay.
Some payment gateways don't require a merchant account at all, but these gateways are typically slow to pay you, e.g. Paypal.
Some NZ banks like ANZ and Kiwibank have a payment gateway built into their merchant account fees. They will refer you to the EGATE product from EFTPOS.
The ASB bank has a merchant account product called CardPay, but this product still requires that you use a payment gateway.
Most New Zealand banks do not offer multi currency merchant accounts. Please read the section on multi currency issues.
MULTI CURRENCY ISSUES
A multi currency merchant account enables you to complete the transaction in a currency other than NZ dollars.
Most New Zealand banks do not offer multi currency merchant accounts, however some do support Australian dollars. You should speak to your bank for up to date information on what they support.
WorldPay offers multicurrency merchant accounts, and can remit in NZ dollars. Worldpay can provide daily updates of their exchange rates so that you can update export prices daily.
Paypal offers multicurrency merchant accounts, now in 17 currencies, including NZ$ and AU$ in addition to US$ and euros.
Please note the difference between currency conversion and multi currency merchant accounts. Multicurrency accounts ensure that a customer who sees a price in US$ and pays with a US credit card, will also see the transaction on their credit card statement in US$, with no foreign currency fees for the customer. Compare this to a currency converter, where a product price in fixed in one currency, but a converted price is shown in another currency for display purposes only. The transaction will still take place in the original currency, so export customers will pay foreign currency conversion fees (and they won't know the true price in their own currency until they get their bank statement).
If your export prices fluctuate daily, then this may negatively affect your export customers who seek price consistency, or where their decision to purchase spans several days.