Accepting Credit Cards:
Research has shown that credit cards are the most common form of payment for goods and services purchased online. Most online shoppers expect to be able to use their credit cards to order products. Accepting credit card payments will enable more users to buy your products, make your business seem more professional, and enable easier transactions for both customers and employees.
If your e-commerce business doesn't support credit card transactions, you might not be getting the most from your web site. There are a number of parties involved when you accept credit card payments online, but once you understand how the process works and get the tools you need, it's easy to get started.
How It Works
1. Shoppers browse your site and save their items in an electronic shopping cart system (a service that often is bundled with an e-commerce web hosting package) that allows customers to select products and save them in one location.
2. Information from the shopping cart is sent to a payment gateway service that routes the transaction information to a credit processor.
3. The credit processor ensures the card is valid by contacting the bank that issued the card; the bank either approves or declines the shopper's purchase.
4. The processor receives the bank's decision and routes the approval or rejection back to the shopping cart software.
5. When a transaction is approved, the processor deposits the payment into an Internet merchant account issued by a bank or other financial institution or service bureau.
What Is a Merchant Account?
Merchant accounts function as a clearinghouse, linking your customer's credit card account with your business account and allowing you to receive payments. When choosing a merchant account, pay close attention to the following associated fees:
- Transaction fees: The amount you are charged each time a customer pays by credit card.
- Discount rates: A flat percentage charged to you for every online sale you make - typically this fee is between 2.2 percent and 2.9 percent of the total purchase price for a single order.
- Chargeback rates: The amount you'll be billed if a transaction is denied for any reason. These fees exist to protect the merchant account's issuer from fraudulent purchases.
When choosing a merchant account it's also important to consider the company's customer service offerings, monthly limits (if applicable), and experience working with e-commerce web sites.
Though the process may seem intimidating at first, doing your research and choosing a trusted provider familiar with online retailers can help you control costs.
Even with a merchant account in place, you still should have a backup plan. There always will be a handful of customers who would rather speak with someone in person or use a different payment method when ordering products. Include a customer service email address, toll-free number, and hours of availability on your checkout and shopping cart pages so you don't alienate customers who may not be comfortable with online credit transactions.
More Benefits of Accepting Credit Cards
- Entice customers - Supporting credit card transactions will improve your customer service by giving shoppers an easy way to pay for products 24 hours a day. Online transactions provide consumer security — research has shown that web-based transactions are as safe as in-person transactions. And allowing shoppers to use credit cards increases impulse purchases. The easier it is to buy something, the less time a customer will spend rethinking his choice.
- Save time - You and your employees will be able to focus on other areas of the business because orders are automated.
- Improve cash flow - Accepting credit card payments also will make managing your revenue easier because it takes only a few days to get funds from a credit transaction, as opposed to the week or more it can take to receive a check in the mail and wait for it to clear. And you can count on the money because, once a transaction goes through the checkout process and is approved by the institution that issued the card, credit card payments will not bounce.
