If you feel that you are a “right fit” for the deal industry, one of the first steps you need to decide is whether or not you want to create a site from scratch or use deal software to create your site. This article discusses the difference between the self-serve type deal software providers and the full-serve players. Daily Deal Builder is a deal software provider, and I want to first state that we have attempted to be as unbiased as humanly possible in creating this report.
The main difference between the self-serve players and full-serve players in the deal industry comes down to who is processing payments. The full-serve players use their own merchant accounts to process the transactions on your website. This means really two things for you:
- Ease of use: You don’t have to go out shopping around and applying for merchant services which can be a time consuming and confusing process. By processing your transactions for you, the deal site is taking on the risk of your transactions. This means they have to protect themselves with a pretty iron-clad contract.
- Higher transaction fees: Because the deal site is taking on the risk and some accounting efforts on their end, they expect to be compensated. You should expect to dish out to the deal site a higher transaction percentage rate than you would if the merchant account were in your own name.
The other option is the self-serve model. What this means is that you get your own merchant account and plug in the API credentials to the deal software. This also means two main things for you:
- You have to go out and find a merchant services provider, lock in the rates and get your gateway set up. You should make sure that your gateway’s API is already integrated on the deal software you are using. If it’s not, it will require that the API gets integrated.
- More freedom/responsibility: You are responsible for your own business and your own transactions, however, the deal software providers typically don’t force you to sign an iron clad contract with them. They typically allow a ‘use at your own discretion’ model with the ability for you to cancel any time you want.
For some companies the choice is simple and clear, while to others it might not be quite so simple. Each company operates differently and so the choice of which model to go with is not always crystal clear.
Which model do you prefer?