Credit card processing is the first thing that comes to mind when considering online payments. Some people remain reluctant to use their cards online, but in general credit cards have become the standard method of payment on the Net.
It is possible to run an online business without accepting credit cards, but this is really only viable if you are in a situation where you are not likely to get an impulse buy. (If you’re selling yachts or executive jets for example.) For most E-businesses, accepting credit cards is essential.
How Credit Cards Work Online
So how does it work? The desired result is to transfer funds from the customers credit card account (held at an Issuing Bank) to the seller’s bank account (held at an Acquiring Bank). The first problem is that the seller can’t use any old bank account, it must be a Merchant Account – in fact a particular type of merchant account called an Internet Merchant Account.
The typical sequence of events (slightly simplified) in an online credit card transaction is as follows:
1. The customer enters the credit details onto a secure online form, which is usually part of the shopping cart system provided by the Web-Store Service.
2. The next stage is basic fraud avoidance such as checking that the card number is valid and verifying the address.
3. The details are then forwarded from the transaction-processing system on the Web-store site to the Credit Card Association (e.g. Visa or Master Card) via a Payment Processing Network.
4. The transaction is either Authorized or Declined, depending on the state of the customer’s credit limit. If it is authorized, funds are reserved to cover the transaction.
5. The results are communicated to the merchant. After the goods ship, the merchant can issue a Capture Request which is a request for Settlement, the final stage in which the funds transfer to the merchant takes place.
You’ll need an Internet Merchant Account to accept Credit Card payments. Merchant accounts are accounts that accept and hold credit card transaction monies. These accounts can be established through merchant service providers (MSPs) such as banks or via independent service organizations (ISOs).
If you have an existing Merchant Account, check whether your merchant provider will “broaden” your account into an Internet Merchant Account.
We have worked with several of the popular merchant account providers, E-Online Data is a great provider for basic shopping carts. The Paymentech Orbital Gateway is great for the more sophisticated cart system.
A Transaction Processor (Payment Gateway)
Not only will you need a merchant account setup to take online transactions, but you will need a payment gateway. The payment gateway is the part of the puzzle that connects your shopping cart with your Merchant account.
It’s not unusual that there are a handful of fees. Be sure you’re clear on what they are before you purchase. The typical fees include some sort of set up fee. This is usually a one-time fee. The next fee will be your monthly fee. Now it’s not uncommon for the fees to be based upon services you’ve asked for – a la carte. You pick and choose what you want and the fee is for the sum of the services you choose. Look for and be sure you understand if the monthly service fee is a flat fee or a percentage of sales or some combination of both.
Make sure you learn where the break points are for the price changes which are often based upon either $$ sold or quantities sold. DO YOUR HOMEWORK! We can’t stress this enough. Check out a bunch of these folks and compare them apples to apples. Start with your own bank.
We offer a couple of payment gateways that we have worked with – Authorize.net and Plug N Pay.
Should I Use PayPay?
Another popular option is PayPal, an online payment service. PayPal became popular with online auctioneers, and is now owned by eBay, but also offers premium and business accounts. If you are dealing with low volume then this might be the most reasonable approach.
In some cases, you can get both a merchant account and transaction processing services from the same organization. Be careful of pricing! Make sure you understand what you’re agreeing to before you sign. Again, start with your own bank.
To sum it up, SecureSiteCommerce.Company can take the stress out of deploying your online store and help ensure success. If you do not currently have an Internet Merchant Account, you will definitely want us to explain this process in detail. There are enough critical considerations specific to the World Wide Web that you may want SecureSiteCommerce.Company to save you invaluable time.