Almost everyone has a credit card now that they can use for internet shopping.
There are a small percentage of people who refuse to use credit cards… they make up a small percentage but you should still give them other options to pay for your product.
Fortunately the internet has developed to the point that you can get a payment system up and running in a few hours and start accepting credit cards right away.
Although the majority of people would prefer to use credit cards… you should still offer other methods.
Credit Cards And Merchant Accounts
You’ll want an option for the customer to pay with credit cards. You can either use a third party service like PayPal to deal with the credit cards or you can get a merchant account (recommended).
Merchant accounts allow you to directly deposit a customer’s money into your own bank account.
Many banks now offer eCommerce merchant accounts that simplify the job for you but keep in mind:
- Having a merchant account will cost you extra since the bank does not process the credit cards (it works as a middle man with the credit companies).
- Banks are very strict and rigid with approving accounts.
You can also get merchant accounts with the direct provider (the company that processes the credit cards). A direct provider will be a cheaper option then the using the bank.
Here are a few direct providers that provide merchant accounts:
The payment gateway is the process that communicates digitally with the credit card company, your bank and your website. Your merchant account provider will most likely have a gateway ready for you.
If you’d like to choose a different gateway, find one that accepts all the major credit cards:
- American Express
Make sure your gateway is compatible with your shopping cart software. You don’t want to be spending money on something that you’ll not be able to use… do your research and make sure it will all work in the end.
Your gateway should:
- Be sure your gateway sends the money to your bank account often and not once a month, a few days at most.
- Your gateway should provide 24/7 support.
- The gateway should allow you to view your transactions and information.
There are many features your payment gateway can add to your account such as recurring billing and such. Check out what they have to offer.
Here are the payment gateways we recommend:
Merchant Account Fees
Unfortunately there’s no way to escape this… you’ll be charged a small fee for every transaction among other things.
You’ll most likely be charged for:
- Processing your application.
- Setting up your account.
- Transaction fee which can be 2-4%.
- Sending you your statement.
- You get charged for not making a monthly minimum.
- Customer charge backs.
- Terminating your account.
Not all merchant account providers will charge you all the fees mentioned above.
Look around and check out your options. Decide what’s best for you.
Alternative Payment Methods
Giving your users more options is not always a good thing but it is in terms to them paying you. Having several payment options will increase your sales by 20% in some cases… that’s a lot of money!
PayPal is perhaps one of the most popular alternatives. PayPal can be used for all transactions if you don’t want to pay too much for the merchant account. PayPal supports shopping carts and it gives you a lot of control in terms of how you sell things and how customers shop. PayPal has many features that simplify the shopping and selling experience. You can find it here:
Electronic checks have somewhat of a foot hold in the online world. Electronics checks are also knows as ACH processing. Echecks allow a customer to transfer funds directly from their account to your account and they cost about 25 cents to $1 per transaction.
Here are several Echeck providers:
Protecting Yourself From Fraud
If you do business long enough, you’ll eventually receive a fraudulent charge-back from one of your customers. This is the most common type of fraud that the online business owner will face.
Stolen credit cards are an issue many owners will encounter. The credit card companies are always taking more steps to protect both the consumer and merchant from fraud but it’s a constant battle.
To minimize the risks of fraud you should use the following security features:
- AVS: Address verification, the address associated with the credit card must match the address given to you by the order.
- CCV: Card code verification, the user must enter the 3 numbers seen on the back of your credit card.
- Filters: Filters can screen for suspicious order and block out IP addresses that have made a large amounts of credit card purchases in a short amount of time.