# Monthly costs / web hosting / merchant accounts?



## TeeShirtSamurai (Feb 8, 2006)

Hello,

You have a great site here with a wealth of information and a very helpful community -- very refreshing.

I plan to open up my own shop within 6 months and I'm very anal about having lists and making sure everything is just right. I just want to make sure I'm clear on what's needed to setup shop online before it goes live:

1. Domain Name (got it)
2. Someone to host your site
3. A website (obviously)
4. A shopping cart program to integrate with your site
5. A merchant account to accept credit card orders

Am I missing anything?
What is the average monthly cost to run your site (merchant account/host/etc)?

I'm a little overwhelmed by the choices for #'s 2, 4 and 5. I have budgetary concerns but don't want to skimp. 

Thanks for any responses.


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## jdr8271 (Jun 16, 2005)

*Re: Monthly costs?*

Most people use paypal for 4 and 5.

For hosting...theres a million different companies. I have had a good experience with intelnetics.com


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## Rodney (Nov 3, 2004)

*Re: Monthly costs?*

I wouldn't say "most" people use PayPal for 4 and 5, but it's a good way to get started.

For #2, I would say never skimp on your webhosting budget. Your shirts can't sell if your website is down.

If you have a "real" (like through a merchant account provider with a processing gateway that sends the funds to your bank account every 3 days) merchant account, the monthly fees will probably be around $30-$50. With PayPal, there are no fees.

Hosting should run you between $10-$40 per month depending on where you go. LunarPages is good, Pair is great, but not as cheap.

Most webhosts will have some sort of ecommerce package or have the ability to install ecommerce scripts on your site (like zencart, oscommerce, etc).

Don't forget:

6. Printed T-Shirts
7. Marketing Plans/Budget


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## EngBulldog (Dec 14, 2005)

*Re: Monthly costs?*

I have read several postings about paypal and most have been pretty neutral, but anyone explain the negatives with having paypal as their only / primary merchant. Besides having to transfer funds to your personal bank account. Thanks for any info


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## TeeShirtSamurai (Feb 8, 2006)

*Re: Monthly costs?*

Rodney,

I saw you recommend e-onlinedata.com as a merchant in another post. I just want to make sure I am clear about the monthly costs. Does this seem about right?

Statement Fee: $10
Monthly Processing Minimum: $25
Authorize.net Access Fee: $15
==========================
$50/month

Also, when they mention the 2.29% Visa/Mastercard rate that is what they are going to take for themselves each transaction?


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## suzieh (Feb 8, 2006)

*Re: Monthly costs?*

For webhosting, use *Cavecreek **http*://cavecreek.net/. Don't skimp on cost. Lots of bandwidth, stable, live tech support from real geeks. They've been around a long time. They used to have a merchant account service called CC Bill...kind of costly, but merchant accounts are tough to get and are based on your credit rating. 

I searched Yahoo's webhosting several month's back and the reviews were not good. Slow and lots of downtime, hard to get support. I'd budget $25 for reliable ISP provider. You'll have to take into consideration what you want (use own CGI scripts, secure server, windows, linux, etc....the geek details).

Explore e-commerce web templates. Many are available for under $200.00.

Your best resource may be your local libarary....try our Los Angeles Public Library's website 
http://www.lapl.org/resources/guides/startbus/1start.html

Lots of information on the site on starting a business, links to Small Business Administration (go to their site http://sba.gov/)

I have the very old hardback of this book. I suggest often for very new business owners:

*The McGraw-Hill Guide to Starting Your Own Business : A Step-By-Step Blueprint for the First-Time Entrepreneur (Paperback)*
by Stephen C. Harper $10 from Amazon.

Susan


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## TeeShirtSamurai (Feb 8, 2006)

*Re: Monthly costs?*

Suzieh, thanks for the great info. 

I had no idea your credit rating affected whether or not you could get a merchant account. My credit isn't bad but it isn't super.


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## TeeShirtSamurai (Feb 8, 2006)

*Re: Monthly costs?*

Nevermind the rate question, got it:

**Monthly Processing Minimum:* There is a $25.00 Monthly Processing Minimum for every merchant account. This is the minimum amount you must pay each month for your Visa/MasterCard processing. The Monthly Processing Minimum does not apply to monthly fees, gateway fees or transaction fees. 

*Example #1:* If your rate is 2.29% and you have *$1000* in sales during the month, your total Visa/MasterCard processing fees would be $22.90 ($1000 x 2.29% = $22.90). This amount is less than the $25.00 Monthly Processing Minimum, so you would ONLY be billed the Monthly Processing Minimum. 

*· NOTE: *You will never be billed the Monthly Processing Minimum and the Visa/MasterCard rate. You will be billed the Monthly Processing Minimum* OR* the Visa/MasterCard rate, _whichever is greater_ for that month.

*Example #2:* If your rate is 2.29% and you have *$1500* in sales during the month, your total Visa/MasterCard processing fees would be $34.35 ($1500 x 2.29% = $34.35). This amount is greater than the $25.00 Monthly Processing Minimum, so you will ONLY be billed your Visa/MasterCard rates for that month’s processing (and no minimum will be billed for that month).


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## Rodney (Nov 3, 2004)

*Re: Monthly costs?*



ph0yce said:


> Rodney,
> 
> I saw you recommend e-onlinedata.com as a merchant in another post. I just want to make sure I am clear about the monthly costs. Does this seem about right?
> 
> ...



That sounds about right.

The 2.29% fee is the fee they take from each transaction. Most all merchant accounts will charge varying percentage fees per transaction depending on your risk factor as a merchant (brick and mortar swiping the card versus mail order/telephone internet sales with no card present).

How eonlinedata does it is say you process $200 worth of transactions on Monday. Monday afternoon, those transactions get "batched" and and sent for collection. By Wednesday or Thursday morning, they deposit that $200 directly into your bank account without any fees taken out.

At the end of the month, they bill you for your transactions (the 2.29%) and for the gateway fees. 

Some things are "negotiable" like statement fees, etc, so if you are high volume, you can try and work out better rates.

A "gateway" is how you get your shopping cart to securely, automatically and electronically communicate between your customers bank and your merchant account provider at the exact time of sale.

That way when a customer places an order in your store for a t-shirt, they can find out in realtime if that transaction is approved and you know you will get paid for the merchandise.

Usually, most stores are setup to "Authorize" the order total at the time of sale, and then "capture/finalize/batch" the order once the merchandise actually gets shipped out. The gateway handles all this.

Without the gateway, you would have to just accept the credit cards securely through your shopping cart. Then use the online merchant account terminal to type in the credit card numbers and process each transaction. This can get very time consuming and also introduces a margin for error (typing in a cc number wrong, billing address wrong, etc). There is also the chance the card is declined and then you have to contact the customer to check to make sure they typed the info right, gave you a good card number, etc. You also need to screen the orders for fraud, etc.

The gateway makes it all automated so once the customer puts in the information in your shopping cart, it gets sent directly to their bank via your gateway and they (and you) will know right away if the transaction is approved or declined. The gateway can also handle automated fraud screening and address matching.

Oh, one thing I forgot in your list above. You would need a SSL (Secure Sockets Layer) Certificate for your webhosting account so you can process transactions securely (throuhg a web address like http*s*://yourstorename.com). Sometimes the webhost can provide you with access to their "shared" SSL server so that you don't need to get your own, but the secure URLs will be like https://yourhost.com/~youraccount/yourcart/checkout.php instead of https://www.yoursite.com/yourcart/checkout.php (which doesn't always make a difference, but sometimes having your own SSL can help give the customer more confidence in buying from you, especially if they don't have to get transferred to a different URL).

Hope this helps some


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## TeeShirtSamurai (Feb 8, 2006)

*Re: Monthly costs?*

The more I compare LunarPages to Pair and Cavecreek, the more I like them.

With regards to the SSL Certificate, they do offer a shared certificate. However, they do also allow you to purchase a personal certificate as well. In order to get a personal certificate you have to supply the following information (last question below):



*Domain/subdomain name to make the cert for:

(the subdomain or domain must already have been setup)
Country:
State / Province:
City:
Company Name:
Division:
Email address you wish to have associated to the certificate:
Password for the cert: (must be alpha numeric only - Aa-Zz / 0-9)
Street Address.
Zip/postal code. (Please note we cannot accept PO Boxes for addresses)



*Please also note that a certificate can only be set up for either https://www.domain.com or https://domain.com. If a certificate for https://domain.com is accessed through https://www.domain.com, it will give a security warning saying the name does not match the name on the certificate. The certificate will still secure the data however.
I have no problem with any of that but am a little confused by the subdomain bit there. Assuming a fictional name of www.joebobstshirts.com, there is no subdomain and all I would need to submit for the certificate would be www.joebobstshirts.com, right?

I'm assuming the subdomain bit means if you don't have your own domain? Give the same name but under your ISP (i.e. comcast.com/joebobstshirts) instead. I wouldn't need to worry about a subdomain if I have my own top-level domain right?


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## cneutra (Jan 27, 2006)

*Re: Monthly costs?*

Hi all, I'm in the same place in the growth of my t-shirt business as Ph0yce, so thank you for posing the original question so succinctly.

Rodney, would you consider PayPal a reliable gateway?

Can anyone describe what happens after Paypal takes a payment from a customer? (How does Paypal notify me? Because I, as CEO and chief mailroom clerk, need to fulfill the order promptly.

Any thoughts on OScommerce as a shopping cart source? It's free and a recommended vendor on the PayPal site. What are the pitfalls?

I had planned on having my web developer use the PayPal shopping cart for business. But I need to make sure I have a scalable solution. Although the basic PayPal program seems like a good deal for t-shirt vendor newbie, once you sell approximately 30 shirts at $20. per month their price escalates and a monthly fixed fee service becomes the more affordable option.


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## Rodney (Nov 3, 2004)

*Re: Monthly costs?*



ph0yce said:


> *Please also note that a certificate can only be set up for either https://www.domain.com or https://domain.com. If a certificate for https://domain.com is accessed through https://www.domain.com, it will give a security warning saying the name does not match the name on the certificate. The certificate will still secure the data however.
> [/list]I have no problem with any of that but am a little confused by the subdomain bit there. Assuming a fictional name of www.joebobstshirts.com, there is no subdomain and all I would need to submit for the certificate would be www.joebobstshirts.com, right?
> 
> I'm assuming the subdomain bit means if you don't have your own domain? Give the same name but under your ISP (i.e. comcast.com/joebobstshirts) instead. I wouldn't need to worry about a subdomain if I have my own top-level domain right?



A subdomain is something like https://*secure*.joebobtshirts.com or *anythinghere*.joebobshirts.com

SSL certs are very specific, meaning that if you set it up without the WWW (like joebobshirts.com) then it will only work correctly with https://joebobshirts.com and if the customer goes to https://*www*.joebobshirts.com they will get an error message popping up saying the security certificate doesn't match the domain it was issued to.

Like this:









Some people like to setup their SSL certificate to work with a descriptive subdomain like https://*secure*.example.com. I think by having the word secure in the URL, they may feel it helps customers to understand that they are shopping in a secure environment.

You don't have to use a subdomain, though. Most are just setup as www.example.com so that the secure certificate works as https://www.example.com


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## Rodney (Nov 3, 2004)

*Re: Monthly costs?*



cneutra said:


> Rodney, would you consider PayPal a reliable gateway?


Although PayPal now offers a gateway, the general PayPal service wouldn't be considered a "gateway" because the customer actually has to leave your site and go to PayPal's site to finish the transaction (which is what gateways help to avoid).

I think it's a good idea for merchants to accept PayPal, and it can be a good way to get your foot in the door accepting online payments, but as your business grows (or right from the start depending on how you prefer to set things up), it's good to have a real merchant account to accept secure visa/mastercard/discover/american express payments. There are some customers that love PayPal and there are some that will refuse to use PayPal to pay, so you don't want to lose customers by not offering a good variety of payment options.





> Can anyone describe what happens after Paypal takes a payment from a customer? (How does Paypal notify me? Because I, as CEO and chief mailroom clerk, need to fulfill the order promptly.


You get an email from PayPal when you get a payment. Usually your shopping cart will also send you an email when an order is placed. Here's a quickie screenshot:




> Any thoughts on OScommerce as a shopping cart source? It's free and a recommended vendor on the PayPal site. What are the pitfalls?


I've seen lots of t-shirt sellers use OSCommerce and the only pitfalls I know about are that it's a bit hard to customize to give it a truly unique look and feel. It has a pretty large userbase and support community and lots of addons to make it do cool things, so it's a good way to go if you're just starting out.



> I had planned on having my web developer use the PayPal shopping cart for business. But I need to make sure I have a scalable solution. Although the basic PayPal program seems like a good deal for t-shirt vendor newbie, once you sell approximately 30 shirts at $20. per month their price escalates and a monthly fixed fee service becomes the more affordable option.


PayPal has a new "merchant account" option that is more like a traditional merchant account, but it comes with some weird restrictions and requirements (like special wording on the checkout pages or something). I think a combination of a traditional merchant account and PayPal is a good scalable solution.

As I mentioned in another thread, I started out not accepting credit cards at all (very hard to get a sale that way...but what can I say, it was 1996 and banks weren't really "web friendly" like they are now  ). There was no PayPal back then. So I started using a service called CCNOW, then added PayPal when they came around, then got my own merchant account as my business grew. CCNOW is still a good way to process credit card transactions outside of PayPal, but they have very high transaction fees (9-10% last time I checked) but no monthly fees. The drawback is that they only disperse funds twice a month and your money has a longer "hold" period (which can be a problem for merchants who need the cashflow to buy more inventory).


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## Rodney (Nov 3, 2004)

*Re: Monthly costs?*



EngBulldog said:


> I have read several postings about paypal and most have been pretty neutral, but anyone explain the negatives with having paypal as their only / primary merchant. Besides having to transfer funds to your personal bank account. Thanks for any info


The negatives are:

1) Some customers don't like to be transferred away from your site to finish their purchase. They don't know what a PayPal is or why they are going there or if they should trust them. Transferring a customer away from your site to make a payment is also something that can lose their trust in buying from your store.

2) Some customers who DO know who PayPal is may not like PayPal for whatever reason(s). So if they see that as their only payment option when checking out, they will just leave and you lose a sale.

3) Others, more saavy internet customers, who know who PayPal is and see it as your only payment option may not think your business is solvent enough to have its own merchant account and may think you aren't very stable.

#3 is probably a very small minority of customers though, and the main concerns would probably be #1 and #2. 

But having PayPal is better than no online payment solution, so it's good to have it there.

Also, as a counter to #2, there are some customers who know PayPal and use it as the ONLY way they pay for stuff online, so those folk may be more inclined to buy from you if they see you accept PayPal.


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## TeeShirtSamurai (Feb 8, 2006)

*Re: Monthly costs?*



Rodney said:


> A subdomain is something like https://[b]secure[/b].joebobtshirts.com or *anythinghere*.joebobshirts.com
> 
> SSL certs are very specific, meaning that if you set it up without the WWW (like joebobshirts.com) then it will only work correctly with https://joebobshirts.com and if the customer goes to https://[b]www[/b].joebobshirts.com they will get an error message popping up saying the security certificate doesn't match the domain it was issued to.
> 
> ...


Great explanation. So, I'm assuming this is setup through those hosting your website? I think some hosts allow you to add subdomains through a control panel (if they offer that). I just want to make sure this is something you have to let the host know you want, right?


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## Solmu (Aug 15, 2005)

*Re: Monthly costs?*



EngBulldog said:


> I have read several postings about paypal and most have been pretty neutral, but anyone explain the negatives with having paypal as their only / primary merchant.


As well as the problems Rodney described about the impression using PayPal creates for your business, there are the problems some people experience with PayPal itself as a business.

I have experienced problems with PayPal directly, or witnessed them happening to people I know. I wouldn't use the company if I felt I had a choice, but it wouldn't be practical to do anything else. I just have to factor the costs of using PayPal into my running costs.

When I say "problems" I mean things like unlawfully seizing funds for periods of six months or more, refusing to offer buyers adequate protection from fraud, refusing to offer sellers adequate protection from fraud, etc.

Bear in mind they lost a class-action lawsuit.

To get one side of the story I would suggest taking a look at the site PayPalSucks.com. Obviously that will give you an extreme view you need to take with a grain of salt, but it gives you an idea of the kind of problems those using PayPal may potentially face. Some people will never see the bad side of PayPal in their dealings, others will. Personally I use the service anyway, but it is worth being aware of their pitfalls.


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## Rodney (Nov 3, 2004)

*Re: Monthly costs?*



ph0yce said:


> Great explanation. So, I'm assuming this is setup through those hosting your website? I think some hosts allow you to add subdomains through a control panel (if they offer that). I just want to make sure this is something you have to let the host know you want, right?


Yes, that is correct. You either setup the subdomain yourself through a control panel or ask the host to set it up for you.


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## mrmagic2713 (Jan 30, 2006)

*Re: Monthly costs?*

also just for the record, i have read recently that paypal is upgrading their service to address those issues that rodney pointed out. the new paypal system enables your customers to enter the credit card info at checkout, without leaving your site to go to paypal. in fact the custumer will not even know you are using paypal becuase the system will look and and act like a regular merchant account, with paypal doing thier thing behind the scenes. so you guys may want to check that out.


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## Comin'OutSwingin (Oct 28, 2005)

*Re: Monthly costs?*

They already offer this as an upgrade to their basic service. Of course upgrade means MORE MONEY!


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## CoolHandLuke (Oct 27, 2005)

*Re: Monthly costs?*

Pay Pal is pretty good for recognition. A lot of people I know that just had the typical merchant account also added Pay Pal as a 2nd payment option and all experienced increased sales.

Personally, I can’t stand the bunch and do not use them! I had a Pay Pal account to make purchases around 5 years ago, never really any problems with them… just never used it that much. I used the account after many years of non-use for a transaction w/ no problems. After that purchase, I went to use the account again and my account was closed. Took me about a month to get someone who could tell my why. The person told me that I owed them just over $600 for a refunded on someone’s purchase that was supposedly made over 5 years ago. Seeing that I only used Pay Pal to send money, never used it to receive money… how could there be a refund on my account? Why did it pop up after 5 years?

After another two months of dealing with them, they still insisted the only way to reopen the account was to pay the $600. Here’s the best part, paid them the $600 and the account is still closed for the exact same reason. They acknowledge receipt of the $600, and say this must be a different $600 that is now owed.

Kind of funny because I don’t think the total of all my purchases through PayPal equaled $500.


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## suzieh (Feb 8, 2006)

*Re: Monthly costs?*

Rodney, 

Do you use a gateway? I have a problem with "automated" fraud detection and AVS (address verification system) as sometimes there may be a customer typo, or bank may have wrong information or it may be a work address and just old fashioned gut instinct. How's the automation work for international cards?

Plus, if you can get a merchant account, it costs less in fees, etc. By the way, business level Costco members can apply for merchant account...I think it's Card Service International (major company). There's also merchant accounts that let you enter cc# online (if you don't have a cc machine).

Also what are you experiences with chargebacks/fraud? This can result in
higher fees and closure of your merchant account and affect personal credit rating. My 2 cents. Used/refurbished credit card machines/printers are inexpensive. 

Susan



Rodney said:


> A "gateway" is how you get your shopping cart to securely, automatically and electronically communicate between your customers bank and your merchant account provider at the exact time of sale.
> 
> That way when a customer places an order in your store for a t-shirt, they can find out in realtime if that transaction is approved and you know you will get paid for the merchandise.
> 
> ...


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## suzieh (Feb 8, 2006)

*Re: Monthly costs?*

Glad you addressed the PayPal freezing funds issued. Happened to a friend.
Those using PayPal...*transfer funds **a few times a day* to avoid this. PayPal is not a bank...am I correct with this information? I would use PayPal only if no other options, with reservations or offer only upon customer request. Susan



Solmu said:


> I have experienced problems with PayPal directly, or witnessed them happening to people I know. I wouldn't use the company if I felt I had a choice, but it wouldn't be practical to do anything else. I just have to factor the costs of using PayPal into my running costs.
> 
> When I say "problems" I mean things like unlawfully seizing funds for periods of six months or more, refusing to offer buyers adequate protection from fraud, refusing to offer sellers adequate protection from fraud, etc.
> 
> ...


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## Rodney (Nov 3, 2004)

*Re: Monthly costs?*



suzieh said:


> Do you use a gateway?




Yes. I use both the authorizenet gateway and the linkpoint/cardservice gateway.



> I have a problem with "automated" fraud detection and AVS (address verification system) as sometimes there may be a customer typo, or bank may have wrong information or it may be a work address and just old fashioned gut instinct.


The automated system just adds another level of screening, it doesn't automatically reject the card unless you tell it to. You still get final control.

AVS matches are just about an industrywide standard (especially for online merchants) because it helps to give you a better rate and verify cardholder info. It also helps you do easier fraud checks on your own. You can tell if just the zip matched, the street address matched or if it was a full match and decide on your own how you want to handle the order.




> How's the automation work for international cards?


Works fine. I get international orders all the time and haven't had any issues with it rejecting a card. 

I have my own manual fraud screening methods on top of the automated ones and I've got it down to where I can spot a fraudulent order pretty quickly 



> Plus, if you can get a merchant account, it costs less in fees, etc.


One problem with getting a merchant account when you're just starting out and on a smaller budget is that you have to pay the monthly fees even when you're not selling. If you have steady sales (or a budget for it), then it's not so much of a problem. But the fees can add up. The increased sales for having an easy online method of accepting credit cards more than makes up for it though.




> By the way, business level Costco members can apply for merchant account...I think it's Card Service International (major company). There's also merchant accounts that let you enter cc# online (if you don't have a cc machine).


Most merchant accounts that you apply for online allow you to enter credit cards online. They are sort of catered around internet/mail order merchants. That's where the gateway comes in. It has a secure web interface for entering credit cards manually, checking reports, finalizing authorizations, etc.



> Also what are you experiences with chargebacks/fraud?


 Chargebacks and fraud are sort of tied to selling online. As I mentioned, I've gotten pretty good at catching fraud before I ship out an order, even when they get past the automated screening. Lots of fake orders from Nigeria, etc.

Chargebacks are something that is pretty easy to manage as long as you have your company name well branded during the checkout and payment process. That way a customer knows the company name when they see it on their credit card statement.

Even then, it is possible to get a chargeback from an unhappy customer or even a customer that just wants free merchandise (lots of credit card companies side on the buyers behalf by default), although this is pretty rare.



> This can result in higher fees and closure of your merchant account and affect personal credit rating.


It takes a LOT of chargebacks to increase your fees or get your merchant account closed. I don't know about it effecting your personal credit rating, but it's possible since they use your personal credit rating to see if you're "worthy" enough for a merchant account. I know having a closed merchant account due to chargebacks will effect your ability to get a merchant account in the future (it's one of the questions they ask on the application).





> My 2 cents. Used/refurbished credit card machines/printers are inexpensive.


 I've never had the need for a credit card machine/swiper/printer because 99% of my cc orders come from online or by phone. I don't think most online t-shirt sellers would need a physical terminal since all the administration is done securely online.


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