How To Accept Credit Cards On Your Website
by Daniel Ray
I'm going to show you how to quickly get set up to automatically accept credit card purchases on your site. In addition, I'll also be discussing the benefits of accepting:
Online checks
Debit cards
Digital cash
Person-to-person e-mail payments
If you are wondering why your website has traffic, but few sales, it is quite possibly because you either don't accept credit cards, or do accept credit cards, but do so in an unprofessional, non-user-friendly way.
Payment Option #1: Accepting credit card payments
An online check is an electronic transaction enabling the customer to approve payment. A customer needs a checking account and a valid routing and account number to use this option. It is automatically deducted from their checking account through the ACH (Automated Clearing House) system.
For the merchant, accepting credit card payments builds credibility in the minds of potential buyers, save time.
Merchant account providers fall into three main categories:
1. Brokers
If your bank or financial institution won't set up a merchant account to allow you to accept payment online you should contact a broker. A broker acts as an intermediary between you and the direct processors.
1. Direct processors. Such as banks, offer direct access to the credit card processing centers. They will use the payment gateway that will take all the credit cards information, and then passes it along to the bank.
Payment Option #2: Accepting checks online.
According to the Federal Reserve, next to cash, checks are the most frequently used method of completing transactions in the United States.
Electronic checks were designed to take the place of debit cards on the Internet. In order to use a debit card you need the ability to slide the card through an electronic card reader and have the customer enter their PIN #. That's not possible on the Internet. E-Check is electronically debited from your customer's checking account so that you are not waiting for the check in the mail.
Similar to credit card orders, online checking allows visitors to supply their checking information online (or even by fax or email). Once entered into a specific program, checks are then printed out and then deposited like standard ones.
How it works: Customer visits your web site and chooses to buy your product/service and completes an order form on your web site, securely providing credit card or check info. Completed form is submitted to Company's secure server for verification. That information will then either go to your computer or to a transaction service, depending on which of the following two ways you choose to accept check payments:
a) The "print and pay" method. If you have the proper software, you then input the data, and the software allows you to print out the checks. They look like regular checks, but without the customer's signature. You deposit then in your bank account and the bank processes them just like regular checks.
You will need to balance the interests in preventing the shipment of orders for invalid checks by holding up orders paid for by checks (especially those in large amounts) a few days to allow them to clear the bank versus discouraging some customers from placing orders with you if the fulfillment will be delayed.
b) Transaction service. You don't need to buy a software to print out the checks. The information is encrypted and transmitted directly to a clearing house and generally settled within 48 hours.
Currently, if a customer needs to make a payment they need to draft a paper check, stuff it in an envelope, put 34 cents postage on it, and mail it to you. e-invoices can help to make this process more convenient for the customer by giving them another option in addition to paying with paper checks; they can receive their invoice electronically over a secure server and pay for it at their convenience, including scheduling the payment for a later date or for a reoccurring time frame. Customers can pay using either credit cards or e-checks. This convenience helps build customer loyalty.
Payment Option #3: Accepting debit cards, ATM (automated teller machine)
By the year 2000, two-thirds of American households will have a debit card. Debit cards are expected to rival cash and checks as a form of payment. With the debit card, you are using your own money, not the issuer's money.
Debit card transactions have grown from 300 million per month in 1996 to 450 million per month in 1999. In the year 2002, over 500 million debit card transactions per month is projected to occur, and over $2.4 Trillion per year will be generated by debit card sales.
When your customers use debit cards, they are in effect using "electronic checks" to access their checking accounts.
While a credit card is a way to "pay later," a debit card is a way to "pay now." When you use a debit card, your money is quickly deducted from your checking or savings account.
Payment Option #4: Accepting e-wallets (digital wallets).
Most consumers use credit or debit cards to pay for online purchases, but other payment methods, like "e-wallets," are becoming more common.
An electronic wallet is a pocket-sized device with one or two card readers and its own electronic purse, a keyboard, and a screen.Wallets can transfer value to and from electronic cash storable smart cards, allowing you to make person-to-person payments without handling cash.
Some Internet-based payment systems allow value to be transmitted through computers, sometimes called "e-wallets." You can use "e-wallets" to make "micropayments" - very small online or offline payments for things like a magazine or fast food. When you buy something using your e-wallet, the balance on your online account decreases by that amount. "E-wallets" may work by using some form of stored value or by automatically accessing an account you've set up through a computer system connected to your credit or debit card account.
Payment Option #5: Accepting person-to-person e-mail payments.
It still amaze me how many business owners neglect closing the sale with accepting credi cards. If you are an e-tailer and wish to begin accepting credit card payments over the internet, but are not sure where to begin, this tutorial is for you. It is absolutely critical to have a merchant account so people can buy your product or service with their credit card.
Below you will find some of the key strategies, techniques and advanced information that will enable you to optimize your website and maximize your sales. There are however, a couple of different ways to this as well:
You can get your own Visa/Mastercard/AmEx/Discover accounts with a local bank.
You get Visa/Mastercard/AmEx/Discover accounts through a broker (these brokers are all over the country).
You can hire a fulfillment house and use their credit card accounts.
You can use a payment type such as Cybercash or First Virtual.
You can use a third party billing company (in other words, use someone else's merchant credit card accounts for a fee).
#1: If you have a very good relationship with your bank, and they don't require a security deposit, it is best to get the merchant credit card accounts through them. They will require a discount rate.
#2: Going through a broker is my personal preference. It is usually very easy to get approved, there are no security deposits required, and they can get you a great discount rate.
The only other expense will be that you need a terminal, software product, or web-based software (whatever you decide) to process the credit cards (yes, this software will process the credit cards in real-time, all automatically, just like my order system does that I explained above). You can buy this outright for about $900.00, but you can also lease it from them for about $40 a month (this is what we do and this is what I recommend you do).
This form is not a "formal" application. It goes to WorldPay . This is to help him understand what type of business you are in and a little about your company (so he knows the best way to fill out the formal application that goes to the bank for approval). Just fill out this "pre-application form" at the URL above as best you can (if you leave a few fields blank, don't worry, the bank will never see this "pre-application form"). Once WorldPay receives your pre-application by email, they will contact you within 48 hours to go over some specifics and get out a formal contract to you so that they can set up the details with the bank. It is super easy and takes almost no time at all. I highly recommend them.
#3: A fulfillment house is a company that is designed to do all your work - allow your fulfillment house or warehouse/shipping department to login to pick-up orders and to change order tracking status, so your office always knows the current fulfillment status of each order. You lower costs by avoiding the need to prepare and convey order documents to your fulfillment house, and by avoiding the need to post order updates coming from your warehouse or fulfillment house.
#4: As I mentioned above, I do not recommend using a "transaction company" as it is just to much hassle for the amount of sales you will lose (which will be almost nil).
#5: These third party billing companies let you use their merchant accounts. Your page would link to their order form and they charge the customers credit card. Having your own merchant account allows you to save on credit card processing rates because you are processing your transactions through a bank. Third party services allow you to accept credit cards without a merchant account, (Mastercard and Visa only) and processing fees are much higher than using our own merchant account.
| DISCLAIMER: The content provided in this article is not warranted or guaranteed by Developer Shed, Inc. The content provided is intended for entertainment and/or educational purposes in order to introduce to the reader key ideas, concepts, and/or product reviews. As such it is incumbent upon the reader to employ real-world tactics for security and implementation of best practices. We are not liable for any negative consequences that may result from implementing any information covered in our articles or tutorials. If this is a hardware review, it is not recommended to open and/or modify your hardware. |
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