Accepting Payments Online - Credit Cards
When your customer gets to the point where they need to pay for your services/products, they need to have a variety of payment options. Even though credit card is the most common way to pay online, a wider variety of options will increase your sells for obvious reasons.The first obvious option we will review is credit cards. So, how do you arrange for credit card billing in your site?
The first place to look for will be your bank. Most banks issue merchant accounts to their business customers who fit the bank's profile. If you have a long lasting relationship with the bank, and a good credit rating, you're likely to get approved. If you don't, try another bank nearby – offering to move all your accounts to that bank if they approve you for a merchant account – you're most likely to get one.
You can also go to an online merchant account provider such as some carefully picked and listed on the right side of this page or lookup "credit card processing" in Google to find quite a few companies that specialize in that.
Any way you get your merchant account, you will have to use a processing company to be able to use a processing gateway, that is, if you want to process the transaction in real time.
There is a way of doing so without a processing gateway, manually with a terminal, but this makes all the processing longer, and if you sell software, etc. this will make it impossible to have the client download the software on the spot.
Make your customers feel secure
Use a SSL server that scrambles the data before transferring it to the processing gateway, this is more for assurance than for safety because the chances of a non-secure deal to get picked up by hackers are really remote, but if the customer feels more secure with it, just do it.This shouldn’t be a technical issue either, because your processing company should take care of installing it. If it doesn't, just pick another company.
Use fraud prevention tools
Credit card payments are probably the most secure way to accept payments online, but there are some precautions you must take to minimize the threat of fraud. As we mentioned in the last paragraph, you should use SSL for encryption of the billing data. Use the CVC2 code – this 3 digit code is on the back of all credit cards, preventing the possibility of someone taking a photo of a credit card and using it – you just can't complete a deal without holding the card.Another method of fraud prevention is AVS – Address Verification Service – the shipping address the client supplied is checked against the issuing bank's records. When the address doesn't fit the transaction still can get processed but you can decide if you wish to proceed with the transaction or cancel it. Some processors allow you to automatically prevent the transaction if the address doesn't fit. Ask your potential processor for this option but be advised that even through this lowers the chances of fraud, this can cause some legitimate deals to not get approved in cases that shipping address is different from the address written in the bank's records (which can be fixed with asking for a billing address as well as a shipping address).
Extra services from your processing company:
If you don't have an e-commerce system set up, ask your prospective processing firm if they supply you with one that includes a shopping cart, customer tracking, ways of calculating tax and shipping etc. and how much does these services cost.Of course the firm must answer your full processing needs – starting from setting up the billing system on your server (some just let you use their servers, but make sure your client doesn't see he's in another site), supplying the payment gateway and giving you full access to all transaction logs (minus credit information that usually isn't stored on the servers)
Typical fees processing firms charge their merchants:
- Discount rate: The percentage of each transaction that is charged by the merchant account provider. The more money you make the less percentage you get charged.
- Transaction fee: A flat rate charged for handling each transaction – usually around 25 cents.
- Monthly minimum: If the total discount rate collected does not reach the minimum fee you still get charged for the minimum fee. Usually it's around 25$, but with today's competition, sometimes there is no minimum fee.
- Reserve fee: Some companies keep a portion of the deal to protect themselves from losses caused by high chargeback rates and other risks. The reserve is transferred to the merchant's account after a certain amount of time (usually around 75 days). This usually relates to high risk businesses and merchants with a questionable credit record.
- Chargeback fees: When a chargeback occurs, the processing firm, in addition to the amount of the chargeback, charges a small fee for the chargeback