Will my vISP require
a merchant account for processing credit
cards?
Anyone accepting credit cards
needs a merchant account and a gateway service.
However, the Alliance
ISP Solution provides the merchant
account as part of the total virtual ISP success
system.
Some vISP Providers require
the virtual ISP to secure their own merchant
account and gateway service. A few, like
Alliance Solutions, provide a "shared" merchant
account. Each has its advantages and its
disadvantages. What is the difference?
Your Own Merchant Account:
The upside for setting up your own merchant
account is that it gives you daily control of
your money - you receive payments into your
account every day. But the downside is that it
is costly, you have to be approved, it can take
up to six weeks to set up, there is a
lot of administration, you will probably have to
pay higher discount rates and the vISP Provider
makes you pay in advance (prepay) for services
used by your subscribers. As a result, this can
wreak havoc with a virtual ISP's cash flow -
especially in a case with fast subscriber
growth. The faster your subscriber base grows,
the more you must pay in advance each month.
A Shared Merchant Account:
The upside for a shared merchant account is that
you save the costs of having to set up your own
merchant account (as much as $500), you save the
monthly maintenance fees (as much as $50/month),
you do not have to be approved, it is available
immediately, you save all of
the administrative work (this is handled by the
vISP Provider), you probably receive lower
discount rates (due to the combined volume
through the account) and you do not have to
prepay for the services used by your
subscribers. The downside is that you receive
funds once a month rather than daily.
Why does a vISP Provider
require payment in advance?
First, everything in this business is prepay for
everyone. This means that the vISP Provider must
also prepay the networks for the service your
subscribers will use. So by requiring the vISP
to prepay, it keeps the provider's cash flow
stable. Second, it lowers the risk of bad debt.
Alliance Solutions offers
both methods:
With the Alliance ISP
Solution, a virtual ISP can choose
either method. If you choose to use your own
merchant account, you will need to prepay for
all services. If you choose to use our shared
merchant account, you will not need to prepay
for all services.
Using Our Shared vISP
Merchant Account:
In the case of our shared merchant account, we
use a "generic" name: "Internet Services." We
collect the funds from the subscriber through
our merchant account, subtract the wholesale
costs of the services provided to your
subscribers and send the virtual ISP a check for
the difference. The subscriber sees a charge on
their credit card statement from "Internet
Services." Because we collect the funds from the
subscriber in advance, we do not require our
virtual ISPs to prepay for services. Currently
95%+ of our virtual ISPs are using the shared
account.
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