Accepting Credit Cards Online

Online credit card transactions can be a fabulous way of providing a 24/7 storefront -- both making it easier for your customers to purchase from you, as well as reducing your work for each purchase. Online credit card transactions can even be of benefit to non-retail businesses and organizations. You can allow clients to pay invoices online or members of your organization to register for events or make donations online.

There are four key things you need to know about accepting credit cards online.

Basics of Accepting Credit Cards

  • Merchant Account
    This is an account that allows merchants to process credit cards. In order to accept credit card transactions online, you need to have a merchant account that is authorized to use Card Not Present transactions or Mail Order/Telephone Order (MOTO) transactions. Your web developer should be able to assist you in setting up a proper merchant account if you do not already have one. Many times if you have a merchant account for offline transactions already set up you can work with that provider to prepare your account for Card Not Present transactions.
  • Internet Gateway
    This encrypts your customer's transactions from your website, submits them for authorization and settlement to your merchant account and holds the numbers securely.
  • Shopping Cart
    This is software on your site that allows customers to put your products in a "cart" as they prepare to purchase it. Visitors can change the quantity of items they want to order, and when they are ready they can check out.
  • Secure Server
    A secure server encrypts and decrypts data sent to and from the server to prevent a hacker from getting the credit card numbers. In order to do this, your website host or designer will need to set up your server to handle the secure transactions. You will also need to get an SSL (Secure Sockets Layer) certificate. This is a certificate that verifies that you are who you say you are – so that people can trust that when they give you their credit card number you will not abuse it.
    You can see an example of a site that is secure and has a certificate at: https://www.designhousestockholmusa.com/ When you look at this page you will see a lock on your browser. If you double click on the lock you should be able to read info about the certificate. The server uses the secure mode when you enter https://. Your web developer should only use this for pages that require it because it causes the browsing to be slower. For example, you can go to http://www.designhousestockholmusa.com/ (the only difference is that the "s" in the "https://" is missing) and it is the same site, but it is not in secure mode (it will load faster this way).

Costs of Accepting Credit Cards

Now that you understand the basic elements of online credit card transactions, how much will it cost you to set this up?

  • Merchant Account
    There are many different costs associated with a merchant account. Usually, there is an initial application/setup fee, which can range from $0 - $500, although sometimes this is waived. Your monthly costs are dependent upon the following fees: customer service fee, discount rate, and transaction fee. A discount rate is the percentage of bank card sale amounts that you are charged for the transaction. A transaction fee is a set amount that you are charged for each transaction in addition to the discount rate. Often times there is a minimum monthly transaction fee that you will need to pay, even if you didn't have any credit card transactions that month. The monthly minimum transaction fee can range from $15 - $30 a month (calculated by your total discount rate plus transaction fees).
  • Internet Gateway
    Gateways can range in price from $20 - $60 per month, depending upon the services provided by the gateway. In addition, gateways may have setup costs and you may need to pay your web developer to set up your server to work with your gateway. Some common internet gateways include Authorize.Net and PayPal’s PayFlow Pro.
  • Shopping Cart
    Your web developer will work with you to determine a shopping cart that best meets your needs. Many high-quality shopping carts have licensing costs that range from $500 - $3,000. In addition, your web developer will have service costs to set up the software for your website, design the look and feel to match your corporate brand, and complete various configuration steps including loading your products, configuration shipping options, configuring payment methods, setting up your SSL certificate, and training you on how to use the website. There may be customizations that would enable your shopping cart to work more effectively for your business and your customers. You may also want to consider how to integrate your shopping cart into other software systems that you use – like QuickBooks or your back office / ERP software. There are many possibilities, but you will need to talk to your web developer regarding the costs.
  • Secure Server
    You will pay a yearly fee for your SSL certificate from an SSL Certificate Authority such as Thawte or Verisign. In addition, you will typically pay for labor or hosting charges to setup this SSL certificate on your website.

I believe the above method describes the best way to implement online credit card transactions, providing a professional look and easy ordering. As with many things, there are less expensive ways to accept credit cards, but they can cause confusion or cause a loss of credibility with customers.

If you are interested in setting up an online store or have questions or comments – feel free to contact me at lori@brillianceweb.com or at 414-425-4069.

Lori McDonald

President & CEO

About

Lori McDonald

Lori graduated from Purdue University with a Bachelor’s degree in Computer-Electrical Engineering and leads Brilliance Business Solutions with over 20 years of computer engineering and software development experience.  She is an Episerver EMVP, a Microsoft Certified Professional and a regular contributor on Practical eCommerce. Her status as a recognized industry expert has resulted in regular speaking engagements at business conferences.

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