In the last column we discussed the process of credit card enabling your brick-and-mortar business. I pointed out that research has shown that accepting credit cards can help increase revenue and speed up cash flow. This week we will look at setting up an online payment system for your business website. If you think hooking up a brick-and-mortar location with a credit card system stymies most bankers, try asking them how to do it on your website.
The fact is most banks can provide you with the merchant account needed to accept credit card payments online, but beyond that, they have little to do with the process. Even larger banks may only have a single person on staff that is tasked as the "credit card processing expert" and if that person ever goes on vacation, you're pretty much out of luck (voice of experience talking here, folks).
I have helped many clients set up online credit card processing systems and more than once I've had to sit down with the bank issuing the merchant account and educate them on how online payment systems work. Don't believe me? This is a direct quote (here's the Bible, here's my hand) from the manager who was in charge of processing Internet merchant account applications at a local bank, "When someone pays online how do they swipe the credit card in their computer..."
You will need the following to accept credit cards on your website: (1) an electronic shopping cart system; (2) a payment gateway service; (3) a credit card processor; and (4) an internet merchant account issued by a bank or other financial institution or service bureau.
Here's how online credit card processing works. (1) Your customer submits his credit card information at checkout on your website. (2) The shopping cart software sends the transaction to the gateway. (3) The gateway routes the information to the processor. (4) The processor contacts the bank that issued the customer's credit card. (5) The issuing bank approves or declines the transaction. (6) The processor routes the result back to the gateway who then passes the result back to the website shopping cart system. The entire process is done electronically and takes seconds to complete.
We covered most of these elements last week. Here's a quick refresher for those who missed the basics, then we'll talk about the shopping cart system you'll need to implement on your website.
Payment Gateway Service: The payment gateway service comes into play when a customer submits their credit card information to the webpage form. Think of the gateway service as the middleman in the process. The website's shopping cart checkout system electronically submits the credit card to the gateway service that then routes the information to the processor for approval.
Credit Card Processor: The credit card processor is an electronic data center that processes the credit card transactions coming from the gateway company, ensures that the charge is valid, then settles the funds in your merchant account.
Internet Merchant Account: An Internet merchant account is a bank or account in which funds from online sales are deposited by the processor. Merchant accounts are usually issued by banks that are associated with the major credit card services like Visa and MasterCard. Be aware that many banks will not grant merchant accounts to Internet merchants as they are often categorized as "high risk ventures." This policy varies widely and in the end, the granting of the merchant account will come down to economics from the bank's point of view. If the bank sees even the smallest iota of risk, you will not be granted the account.
Fortunately, the growth of online sales has given rise to an entire industry of merchant service bureaus that will grant you a merchant account and everything else you need to accept online payments. The fees are usually higher, but it's better than not having an online payment system at all.
Shopping Cart System. To accept online payments you must have what's called a "shopping cart system" that allows the customer to select and purchase products from your website. A shopping cart system typically consists of three components: the product catalog, the shopping cart, and the checkout/payment system. The product catalog is the component that displays the items you have for sale on the website. The shopping cart system is the component that allows your customers to select products by clicking to "add items to cart," and the checkout/payment system is the component that allows the customer to complete the checkout process and pay for their purchase with a credit card (or in some cases an electronic check). It is the checkout/payment component that communicates with the gateway system to complete the transaction.
Adding a shopping cart system to your website can be a simple or highly complex task, depending on the system you select. The cost of shopping cart software ranges from free (for simplistic form-based systems) to very expensive. Which shopping cart system is best for your business depends on a number of factors, including the product you're selling, the depth of your product line, the purchase options you wish to offer customers, the inventory control functionality, and the extent of automation you desire.
There are numerous companies who can assist in the setup of your shopping cart and online credit card payment system. These companies typically charge several hundred to several thousand dollars for their services, but like anything you get what you pay for, so always use a company with good references in this area. When you're dealing with something as important as credit card processing and cash flow, bite the bullet and get it done right the first time. The money you spend now will be returned many times in increased sales volume from credit card customers.
The most important thing to remember when setting up an online payment system is this: online it's all about security and privacy. Though online credit card processing has been around for years there are still many people who are uncomfortable giving their credit card number online. These are the same folks who do not hesitate to give their credit card number over the phone or hand their credit card to a waiter who disappears with it for ten minutes. Online credit card processing is much less susceptible to fraud and abuse than of those scenarios.
Small Business Q&A is written by veteran entrepreneur and syndicated columnist, Tim Knox. Tim's latest books include "Small Business Success Secrets" and "The 30 Day Blueprint For Success!" Related Links: http://www.smallbusinessqa.com http://www.dropshipwholesale.net
According to NOP World, 48% of all Internet users have... Read More
The concept of this is for you to offer a... Read More
Simply put, business plans can make or break your business.... Read More
E-commerce offers customers the chance to eliminate many stages in... Read More
Making profits with your existing website design or creating a... Read More
For a web site to get close to fulfilling its... Read More
An internet business is by far the best way to... Read More
The 21st century has introduced the world to a new... Read More
Did you know that over 90% of all online orders... Read More
You have probably heard many times how you should offer... Read More
Understanding business and product sales can sometimes put me in... Read More
What a great idea! Start accepting credit cards and watch... Read More
If your business features products or services for sale, undoubtedly... Read More
So you want to start a business? Good for you.... Read More
Thanks to the ubiquity of the internet, online virtual businesses... Read More
What would you do if you were sent an email... Read More
For many businesses, e-commerce represents a tremendous method for generating... Read More
--Online Commerce--E-Commerce website is all about selling products and services... Read More
It is often assumed if you want to accept credit... Read More
A common frustration among merchants who sell online via a... Read More
Much of my consulting work comprises writing 'Outside Opinion' reports... Read More
Your site visitors make all the choices when it comes... Read More
Too often we charge ahead and treat the web as... Read More
Greetings!Friends and relitives ask us all the time " How... Read More
Last time, we started to take a look at the... Read More
Can you encounter the number of times where a Credit... Read More
If you learn how other people make money online, I... Read More
Knowing which credit card merchant account to get can be... Read More
Online customer service is still one of the most frequently... Read More
There are lots of ways to advertise for free but... Read More
In Part One we talked a little bit about what... Read More
When I first got my web site built, I thought... Read More
I'm a plain man who uses plain thinking in devising... Read More
It was reported in 'Marketing' magazine this month, that Britain... Read More
To obtain more local customers for your business, consider expanding... Read More
When it comes to e-commerce everything is a little bit... Read More
I recently published a short e-book called 'One Thing I... Read More
E-commerce is gaining pace! Research firm eMarketer predicts that 2003... Read More
The first article of this series discussed page views per... Read More
Concept of ServiceThe current work deals with marketing offer of... Read More
Merchant Account BasicsA Merchant Account is a commercial bank account... Read More
Surf to Google and perform a search on "Internet Merchant... Read More
Can you encounter the number of times where a Credit... Read More
If your business features products or services for sale, undoubtedly... Read More
We all know that accepting credit cards is the key... Read More
Do you have any product that has not been moving... Read More
In my last column I discussed the process of credit... Read More
In the last column we discussed the process of credit... Read More
Participation in B2B Exchanges is increasingly becoming one of the... Read More
Pitfalls of E-business solutions installation processA large distribution company has... Read More
Are you a website owner or a web designer/developer? If... Read More
To conduct business on the Internet, whether informal, one-time only... Read More
Just because you've built your e-commerce website doesn't mean the... Read More
by Jamila White, "The E-Commerce Diva"In the rush to keep... Read More
Do you sell something online? Do you have a business... Read More
The use of electronic cash as a means of transacting... Read More
Many surfers already know about Froogle, Google's shopping portal that... Read More
What a great idea! Start accepting credit cards and watch... Read More
If you're thinking of jumping on the bandwagon and going... Read More
--Online Commerce--E-Commerce website is all about selling products and services... Read More
Your stock is tempting, your prices right - your ecommerce... Read More
The Internet began as a male dominated medium, but those... Read More
Once you decide which products you are planning to sell... Read More
While getting less public handwringing than during holiday season, the... Read More
The Internet has changed the way people do business today.... Read More
Back in 1998 (through 2000 or so), I worked for... Read More
E-commerce |