Online Payments Make It Easy For Your Customers To Buy

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

---

ECommerce Scenario in Pakistan

Pakistan with highest growth rates in 1960s and bad politics... Read More

Why Arent People Buying From Your Ecommerce Website?

Your stock is tempting, your prices right - your ecommerce... Read More

Online Business- What Makes It a Success!

Only a few manage to sell everything under the sun... Read More

eCommerce Software Solutions

All of the long, grueling nights and an unknown number... Read More

Credit Card Processing - 7 Things You Need to Know Before Opening an Online Merchant Account

When considering opening an online merchant account to accept credit... Read More

How To Accept Credit Cards Without a Merchant Account

To increase sales on your website, you must accept credit... Read More

Do Your Online Brokerage Business With Zero Down

If you have little or no capital but you want... Read More

Guide To Safe Online Shopping

Online shopping can be a little frightening to people who... Read More

Your Readers are Publishers Too

Too often we charge ahead and treat the web as... Read More

Website Marketing: 10 Resourceful Things You Can Do With A Product That Doesnt Sell

Do you have any product that has not been moving... Read More

The Origins of E-Commerce

What is the Internet?In order to provide a discussion on... Read More

Intranet Portals ? Collaboration through Team Rooms

Knowledge Management for beginnersKnowledge Management (KM) can be defined simply... Read More

Home Sweet Home Page

"Your home page is the world's introduction to you and... Read More

Set Yourself Apart From The Ordinary

I have written at length about the need to anticipate... Read More

Using Credit Cards Securely Online

Nowadays, shopping online is a very common thing. Making your... Read More

Chinas Online Shopping May Be Booming In The Next Few Years

Data from China Internet Network Information Center (CNNIC) shows that... Read More

Do You Need A Merchant Account?

Deciding when to get your own merchant account for internet... Read More

Web Store - Why Do You Need One?

Internet has opened a new era of business opportunities. Each... Read More

Managing Project Risks and Issues

Inherent (or Business) RiskInherent Risk is the risk that exists... Read More

Complementary-Relational Linking and How It Could Save Your Internet Business

The concept of linking is that sites with common interests... Read More

Starting An E-Commerce Business

The development and expansion of the Internet has made business... Read More

Using Drop Shipping for E-commerce

Thanks to the ubiquity of the internet, online virtual businesses... Read More

What Does It Take to Make Money Online?

What a loaded question! Let's narrow that down a bit... Read More

The Rise of Multinational Virtual Corporations

The virtual corporation is the emerging organisational form, which best... Read More

Gooooooooooogle It!

....there's much more to Google than you thought:With the wealth... Read More

Top Ten Qualities to Look for in an Online Pharmacy

As you may have noted, there are thousands or even... Read More

Getting Started in ECommerce ? Part Two

In Part One we talked a little bit about what... Read More

How to Boost Conversion Rates, While Lowering Merchant Account Fees!

Using an Address Verification System (AVS) when processing your online... Read More

Cyber Banking

The use of electronic cash as a means of transacting... Read More

Saving Money On Your E-commerce Site

After building and transferring many e-commerce sites it still amazes... Read More

How To Turn Any Product You Sell In To Residual Income

The concept of this is for you to offer a... Read More

The Five Most Commonly Encountered, Off-putting E-commerce Errors

While getting less public handwringing than during holiday season, the... Read More

Online Shopping: Legal Challenges for Taxing Authorities

E-commerce offers customers the chance to eliminate many stages in... Read More