Accepting credit cards on websites is absolutely necessary for the success of online sales efforts. While there are several other payment methods available for the website, credit cards outstrip the others due to their wide usage and convenience.
There are two types of companies that can enable the website to accept credit cards. The first is a 3rd party processor, and the second is a merchant service provider (called MSP, or ISO). The main difference between a third-party processor and an MSP is the way the website integrates with their services, the obligations that website owners have during the transactions they process, and the price they'll pay for the ability to accept credit cards. Third party processors include companies like Paypal, Google Checkout, 2checkout.com, CCnow, Clickbank, and more.
Assuming that you are based in the US, this depends mainly on how much business you do, the type of product you sell, how you want to integrate payments into your website, and whether you sell on eBay or not.
For businesses in the US, Paypal will pretty much be the lowest cost method to receive payments you'll find. As much as I hate to personally admit it, it would be very difficult to find a company that can beat the paypal fee. However, paypal has many negative attributes that often make it a bad solution for serious e-commerce sites.
Personally, I think paypal makes an excellent complementary payment method, because there are many online shoppers who prefer to use it.
Merchant accounts have a fixed monthly fee associated with them. If you only process a few dollars a day, it's just a waste of money to use a merchant account. Third party processors do not have a fixed monthly fee, and will be a more cost effective solution for low volume or individual businesses. If you do a lot of business, then merchant accounts will give you better control over the funds you process, and how your payment methods are integrated into your website. Many people consider threshold switching from 3rd party processor to MSP about $ 1000 per month in processing. Personally, I'll switch to a merchant account about $ 500 per month, so I can provide a clean experience for my customers. But anyway, this is not a large processing volume before a merchant account can be justified.
Many types of products are considered high risk. High risk refers to a product or service that carries an increased risk of being billed back, or obtained by or sold to an improper buyer. Some examples of high-risk businesses include adult-related products, travel-related pharmacies, online pharmacies, and downloadable products. Online risk is generally much higher than retail. On a personal note, I think that most online businesses will experience some sort of cheating in their online endeavors. No 3rd party processor or MSP is like providing services to high-risk businesses. In this case, the business should contact everyone to find a company that can provide services to them. In some cases, they may have to process through an offshore merchant account provider.
If you want a completely seamless system where your customers never leave your website you will need a merchant account and payment gateway. Payment gateways generally have two integration methods, but I only recommend the use of API integration methods. Third party processors require your customers to fill out their information on websites owned by 3rd party processors. The seamless integration method is considered by many to be fundamental in providing a smooth and efficient shopping experience. Paypal does provide a system called payment pro, which is a step in a seamless direction, yet difficult to integrate into a website, and still creates some usability barriers. If you look at a major e-commerce site, you'll find that everything uses integration with their payment processing methods. Third party processors may be an alternative payment method, but this method is rarely the main method for serious companies.
Do you sell on eBay? If you sell on eBay, you must accept Paypal. Paypal is integrated with eBay's checkout system, and most eBay users hope to use Paypal to complete their purchase. Merchant accounts are hard to integrate with eBay and should always rely on some standalone systems for them to work smoothly and automatically. Businesses that sell a lot on eBay may see one of these cashier management systems at some point, but PayPal is the perfect solution for most of the smaller eBay businesses.
I'm making the assumption that you already have a shopping cart on your site. This could be a specially designed system, or it could be a pre-made cart system such as oscommerce, zen cart, and many other popular carts.
If you go to the merchant account, you also need a payment gateway. It's easiest to get a payment gateway from the same company as your merchant account. If you already know the payment gateway you want, make sure the merchant account provider can set it up for you. If you do not know what payment gateway you want, Authorize.net has always been a safe bet. There are many payment gateways available, with the most common being Authorize.net, and Verisign. You'll want to use a payment gateway that has an API (Application Programming Interface) method. It's these APIs that allow your site to integrate transparently with the payment gateway.
SSL (Secure Socket Layer) certificate (required if you use payment gateway API).
Shopping cart system (this can be custom built or you can use a ready-made shopping cart software).
Integrate your payment gateway or 3rd party checkout system.
The Merchant account provider also has a list of requirements for setting up an e-commerce merchant account. I recommend making sure that as much as possible is met before applying for a merchant account.
Depending on whether you have a specially designed or generic shopping cart system, it can be as easy as pressing a button, or as hard as writing a complex integration script, to integrate your website with a payment gateway. Most of the widely used shopping carts will have modules or plug-ins to integrate with most of the popular payment gateways. The custom basket requires a special payment module, which should be coded by the person designing the cart or other competent programmer. Here is a guide how to integrate Authorize.net with a website using php5. Also, if you are interested in purchasing the Authorize.net integration script, authnetscripts.com has scripts for PHP, ASP, PERL, and Cold Fusion. I have used their own script and highly recommend it. The price of one of these scripts is much less than hiring a programmer to write one for you. The integration tutorial for most payment gateways is available almost in every programming language, but again this should be programmed by a professional. If you need to hire someone to do the integration for you, I recommend services like getafreelancer.com and rentacoder.com. Be sure to choose a service provider with positive feedback, and make it a secondary factor. Here's a quick guide on how to use the freelance market.
If you are using a payment gateway, make sure you do not store credit card numbers or other sensitive information unless you know exactly what you are doing, how to properly encrypt your stored data, your server is compatible with PCI, and your website. has no security vulnerabilities
Once your website is integrated with a payment gateway or a third-party processor, you're ready to start receiving payments. The whole process is not as complicated as it looks, and should be done in steps to prevent problems.
Merchant Account / Payment Gateway Flow-is the order of setting things I recommend for a small number of potential problems.
Hopefully the whole process goes well for you. Once everything is done, you can focus on marketing and promoting your e-commerce business.
There are two types of companies that can enable the website to accept credit cards. The first is a 3rd party processor, and the second is a merchant service provider (called MSP, or ISO). The main difference between a third-party processor and an MSP is the way the website integrates with their services, the obligations that website owners have during the transactions they process, and the price they'll pay for the ability to accept credit cards. Third party processors include companies like Paypal, Google Checkout, 2checkout.com, CCnow, Clickbank, and more.
Differences between MSP and 3rd party processors:
MSP's
- Business applies to merchant account directly with MSP.
- Business is personally responsible for everything they process.
- The customer's credit card statement has their business name.
- Use with Payment Gateway (Seamless integration available).
- Some monthly costs remain in addition to processing fees.
- Possible installation fee.
- Possible long term contract terms.
Third Party Processors
- Business process under the name of 3rd party processor.
- The customer's credit card statement has the name of the 3rd party processor on it.
- Any dispute is made through a 3rd party processor and not a processing bank.
- Businesses and customers have limited protection to avoid being cheated.
- Must use a 3rd party processor checkout system (Paypal has one exception).
- There are no fixed monthly charges.
- Some have setup fees.
- Most have high processing fees (Paypal and Google Checkout are not).
- There are no contracts
- Businesses are partly responsible for the transactions they process.
Which business should be used?
Assuming that you are based in the US, this depends mainly on how much business you do, the type of product you sell, how you want to integrate payments into your website, and whether you sell on eBay or not.
For businesses in the US, Paypal will pretty much be the lowest cost method to receive payments you'll find. As much as I hate to personally admit it, it would be very difficult to find a company that can beat the paypal fee. However, paypal has many negative attributes that often make it a bad solution for serious e-commerce sites.
Personally, I think paypal makes an excellent complementary payment method, because there are many online shoppers who prefer to use it.
How many businesses do you do:
Merchant accounts have a fixed monthly fee associated with them. If you only process a few dollars a day, it's just a waste of money to use a merchant account. Third party processors do not have a fixed monthly fee, and will be a more cost effective solution for low volume or individual businesses. If you do a lot of business, then merchant accounts will give you better control over the funds you process, and how your payment methods are integrated into your website. Many people consider threshold switching from 3rd party processor to MSP about $ 1000 per month in processing. Personally, I'll switch to a merchant account about $ 500 per month, so I can provide a clean experience for my customers. But anyway, this is not a large processing volume before a merchant account can be justified.
The types of products you sell:
Many types of products are considered high risk. High risk refers to a product or service that carries an increased risk of being billed back, or obtained by or sold to an improper buyer. Some examples of high-risk businesses include adult-related products, travel-related pharmacies, online pharmacies, and downloadable products. Online risk is generally much higher than retail. On a personal note, I think that most online businesses will experience some sort of cheating in their online endeavors. No 3rd party processor or MSP is like providing services to high-risk businesses. In this case, the business should contact everyone to find a company that can provide services to them. In some cases, they may have to process through an offshore merchant account provider.
How would you like to integrate payments to your website:
If you want a completely seamless system where your customers never leave your website you will need a merchant account and payment gateway. Payment gateways generally have two integration methods, but I only recommend the use of API integration methods. Third party processors require your customers to fill out their information on websites owned by 3rd party processors. The seamless integration method is considered by many to be fundamental in providing a smooth and efficient shopping experience. Paypal does provide a system called payment pro, which is a step in a seamless direction, yet difficult to integrate into a website, and still creates some usability barriers. If you look at a major e-commerce site, you'll find that everything uses integration with their payment processing methods. Third party processors may be an alternative payment method, but this method is rarely the main method for serious companies.
Do you sell on eBay? If you sell on eBay, you must accept Paypal. Paypal is integrated with eBay's checkout system, and most eBay users hope to use Paypal to complete their purchase. Merchant accounts are hard to integrate with eBay and should always rely on some standalone systems for them to work smoothly and automatically. Businesses that sell a lot on eBay may see one of these cashier management systems at some point, but PayPal is the perfect solution for most of the smaller eBay businesses.
Now once you have your processing method:
I'm making the assumption that you already have a shopping cart on your site. This could be a specially designed system, or it could be a pre-made cart system such as oscommerce, zen cart, and many other popular carts.
If you go to the merchant account, you also need a payment gateway. It's easiest to get a payment gateway from the same company as your merchant account. If you already know the payment gateway you want, make sure the merchant account provider can set it up for you. If you do not know what payment gateway you want, Authorize.net has always been a safe bet. There are many payment gateways available, with the most common being Authorize.net, and Verisign. You'll want to use a payment gateway that has an API (Application Programming Interface) method. It's these APIs that allow your site to integrate transparently with the payment gateway.
Requirements to process on your site:
SSL (Secure Socket Layer) certificate (required if you use payment gateway API).
Shopping cart system (this can be custom built or you can use a ready-made shopping cart software).
Integrate your payment gateway or 3rd party checkout system.
The Merchant account provider also has a list of requirements for setting up an e-commerce merchant account. I recommend making sure that as much as possible is met before applying for a merchant account.
Depending on whether you have a specially designed or generic shopping cart system, it can be as easy as pressing a button, or as hard as writing a complex integration script, to integrate your website with a payment gateway. Most of the widely used shopping carts will have modules or plug-ins to integrate with most of the popular payment gateways. The custom basket requires a special payment module, which should be coded by the person designing the cart or other competent programmer. Here is a guide how to integrate Authorize.net with a website using php5. Also, if you are interested in purchasing the Authorize.net integration script, authnetscripts.com has scripts for PHP, ASP, PERL, and Cold Fusion. I have used their own script and highly recommend it. The price of one of these scripts is much less than hiring a programmer to write one for you. The integration tutorial for most payment gateways is available almost in every programming language, but again this should be programmed by a professional. If you need to hire someone to do the integration for you, I recommend services like getafreelancer.com and rentacoder.com. Be sure to choose a service provider with positive feedback, and make it a secondary factor. Here's a quick guide on how to use the freelance market.
If you are using a payment gateway, make sure you do not store credit card numbers or other sensitive information unless you know exactly what you are doing, how to properly encrypt your stored data, your server is compatible with PCI, and your website. has no security vulnerabilities
Once you are integrated:
Once your website is integrated with a payment gateway or a third-party processor, you're ready to start receiving payments. The whole process is not as complicated as it looks, and should be done in steps to prevent problems.
Quick Overview:
Merchant Account / Payment Gateway Flow-is the order of setting things I recommend for a small number of potential problems.
- Website Setup
- Setup Merchant Account and Payment Gateway
- Buy and Install SSL Certificates
- Integrate Website with Payment Gateway
- Test Integration, and Run Real Transactions
- Live!
- Setup 3rd Party Processor Account
- Website Setup
- Integrate Website with 3rd Party Processor
- Test and Run Real Transactions
- Live!
Hopefully the whole process goes well for you. Once everything is done, you can focus on marketing and promoting your e-commerce business.
No comments:
Post a Comment