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Another major factor to consider is the processor’s payment terms. You need to ask a few key questions in order to determine whether or not a particular processor is right for you.
Let’s say you are drop-shipping merchandise. In case you’re not familiar with it, drop shipping is what you order a product from a wholesaler, and that wholesaler ships directly to your customer. The customer pays you, and you pay the wholesaler.
The trouble is that you must pay to ship that product to the customer upfront, because most wholesalers won’t be willing to extend credit to you. If you don’t have a huge cash reserve, you will probably need to choose a payment processor that can make cash available to you as quickly as possible.
Here are a few examples of common payment terms:
PayPal - If you’re in the United States, PayPal can make your money available to you instantly through their PayPal MasterCard debit card. This card can be used just like any debit card to make purchases with your PayPal balance (up to $3,000 per day), or you can remove money via any ATM (up to $400 per day).
If you are outside the U.S., or you need to move more than these amounts, you can transfer your money to a bank account. This can take up to four business days to complete.
Amazon Payments - Payments can be withdrawn at any time as long as your balance is at least $1.00. You can choose to have your money sent to an Amazon.com gift certificate or you bank account, and it says withdrawal to a bank account takes about 5-7 business days, which they claim is determined by your bank.
Stripe - According to the Stripe website, money shows up in your bank account seven days after the money is charged. If you are paid for an order on Friday, the money will be in your bank account by the following Friday morning.
Braintree - The Braintree website says U.S. merchants receive funds from Visa, MasterCard and Discover transactions within 2 business days, and American Express transactions within 4 business days or less.
2Checkout - Payments are made weekly, but accounts are subject to a reserve that will be held for 90 days in case of fraud or chargebacks.
CiickBank - ClickBank pays by direct deposit or check. Accounts that receive direct deposit are paid once per week or once every two weeks. All other accounts are paid every two weeks.
Pay periods end at 12 A M. Pacific time on Wednesday, or every other Wednesday for two-week payments. Payments are sent on the Wednesday two weeks after the end of a pay period. Thus, it may take a couple of weeks to receive your first payment, but direct deposits will usually come weekly after that. Their minimum payout is $10.
Square - For payments taken during business hours, they are usually available in your bank account the next business day.
Intuit GoPayment - Money is deposited into your bank account daily at 3 P.M. Pacific.
Keep in mind that most processors have payment limits, minimum payouts, etc. For example, you might have to wait until you’ve accrued at least $100 in funds before you’ll be paid.
Or you might only be paid up to a certain amount of the money you receive, while the rest is held in reserve for a certain length of time in case of refunds or fraud.
Your location is another factor to consider. If you’re in the United States, you probably won’t have to worry so much about this. But if you’re in another country, you may find some payment processors restrict you from being able to use their systems.
The primary reason for this is a high prevalence of fraud in certain countries. However, there are other reasons some processors cannot or will not process transactions in certain countries.
Factors can include:
Currency exchange rates
Banking regulations in that country
The current social or political environment in that country
If you are having trouble finding a payment processor that will allow merchants for your country, you may have to consider using a high-risk provider or perhaps partnering with someone who lives in a country that will allow them to get a merchant account and splitting the profits with them.