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Is Your Website
Credit Card
Friendly?
by:
Tim Knox
In my last column I
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
enhance cash flow. I
also pointed out
that you may have to
look beyond your
local bank for help
in getting things
set up. 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.
If you'll recall,
the question that
spurred this topic
came from a lady who
went to her local
bank for help in
setting up a credit
card acceptance
system for her
business and her
banker wasn't very
knowledgeable on the
subject. I pointed
out that her
banker's ignorance
of the subject
probably wasn't a
reflection on his
skills as a banker,
but a reflection on
the
compartmentalization
of the credit card
aspect of banking.
The fact is, most
banks can provide
you with the
merchant account
needed to accept
credit card
payments, but beyond
that have little to
do with the process.
Even larger banks
may only have a
single person on
staff who is tasked
as the "credit card
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 bank
employee who was in
charge of processing
internet merchant
account
applications, "When
someone pays online
how do they swipe
the credit card in
their computer…"
Much like a brick
and mortar credit
card processing
system, you will
need the following
to accept credit
cards on your
website: (1) an
electronic shopping
cart system that
allows the customer
to select products
and checkout when
ready; (2) a payment
gateway service to
get approval or
declination of the
credit card; (3) a
credit card
processor who will
process the
transaction; and (4)
an internet merchant
account issued by an
acquiring bank in
which processed
funds are deposited.
We covered most of
these elements last
week. Here's a quick
refresher for those
who missed the
basics, then we'll
talk about a
shopping cart
system.
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 who then
routes the
information to the
processor for
approval. Depending
on the reply from
the processor, the
gateway service will
return an approval
or declination for
the purchase. This
entire process takes
just seconds to
perform.
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
financial
institution account
in which funds from
online sales are
deposited. Merchant
accounts are usually
issued by banks who
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
your customer to
choose and purchase
products. Adding a
shopping cart system
to your website can
be simple or
complex, cheap or
very expensive. It
depends on the
product you're
selling and the
options you wish to
offer your
customers. As in
everything, you get
what you pay for.
A shopping cart
system typically
consists of three
components: a
product catalog, the
shopping cart, and a
checkout/payment
system. The product
catalog is your
inventory component
and displays the
items you have for
sale on the website.
The checkout/payment
system is the part
of the program that
allows your
customers to "add
this to my cart,"
and the checkout/
payment system is
the component that
allows the customer
to checkout and pay
for their purchase.
There is a wide
variety of shopping
cart software on the
market and the price
is dependent on the
features you want.
Shopping cart
systems range from
simple HTML form
insertions to full-
blown catalog and
inventory systems
like those used by
Amazon or Dell.
You can spend from
zero to tens of
thousands of
dollars. Some of
them you can set up
on your site
yourself while
others should be set
up by someone who
knows what they're
doing.
You can get a free
Paypal shopping cart
system which is the
most simplistic in
nature, but the
easiest to
implement. Using
Paypal also
alleviates the need
for a bank merchant
account because
everything is
handled by Paypal,
for a fee of course.
You insert HTML
forms into your
website code and
when an item is
purchased.
There are also
numerous online
companies who will
assist in the setup
of your ecommerce /
credit card system.
These companies
charge several
hundred to several
thousand dollars for
their services, so
it would be wise for
you to have an idea
of exactly what you
need before calling
them into play.
Customer submits
credit card. The
site sends the
transaction to the
gateway. The gateway
sends the info to
the processor. The
processor contacts
the issuing bank of
the customers credit
card. The issuing
bank returns the
result of the
processor. The
processor routs the
result to the gate.
The gateway passes
the result to the
website. The website
displays the result.
One thing to
remember when
setting up an
ecommerce system on
your site 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
that do not hesitate
to give their credit
card number over the
phone to a complete
stranger 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
either telephone
processing or giving
it to a waiter.
Eighty-five percent
of internet users
surveys said that a
lack of security
made them
uncomfortable
sending credit card
information over the
Web.
It's up to you to
instill a sense of
security and make
the customer
comfortable shoving
their card into
their computer.
Here's to your
success.
About the author:
Tim serves as the
president and CEO of
three successful
technology companies
and is the founder
of
DropshipWholesale.net,
an online
organization
dedicated to the
success of online
and eBay
entrepreneurs
http://www.prosperityandprofits.comhttp://www.dropshipwholesale.nethttp://www.30dayblueprint.com
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