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vISP Merchant Account


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.

 

 

Alliance Solutions Inc. 238 Porterfield Gap Road, Minnesota. 55425 Tel. (952) 885-9400

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