I'm thinking of starting an online business with my product being sold at £1, but for every transaction Paypal will take 3.4% +.20p, as you can see that's a hefty cut from every sale. Does anyone know of a cheap and reliable merchant account service/provider?.
If you offer Paypal, even if they take more money out, you're likely to have more sales because more people prefer to use Paypal.
PayPal: If you gain 70 cents after deductions, and have 1000 sales, you've made $700.
Something else: If you gain 95 cents after deductions, and have 500 sales, you've made only $475.
Why not offer different payment methods? Moneybookers will let the customer pay the fees which is all good for you, but many people are still using Paypal so it's a whole lot more convenient for them.
Garden Plant, that's about the going rate and you won't find it to much cheaper anywhere. NoChex merchant which is my fave charge a one off sign up fee of 50 quid and charge you 2.9% plus 20p per transaction and the more your process in one hit the cheaper the fees.
They offer:
* No monthly fees
* No annual fees
* No management fees
* No reporting fees
* No fraud detection fees
* No fraud protection fees
* No settlement of transaction funds fees
You can also customise your payment page with your own branding etc.
I'd also advise you to take a look at 2CheckOut, another awesome service.
You can still get free processing with Google Checkout until 2008.
You are going to have to pay someone something to process the order. Typically it's going to cost you AT LEAST 2% and 20 cents per transaction. Many 3rdParty processors will charge you more than that plus a monthly fee, plus a gateway fee, plus a set-up fee.
You may need to adjust your pricing and/or business model for sales of that small amount - sell credits like the NP$ system here.
Cheap Merchant account service 
Oops, I was even looking at my calculator (yes, I used a calculator) saying $700 when I wrote that.
