Selling online is becoming an important business strategy, for both businesses born in the e-commerce era and brick-and-mortar businesses looking to grow their customer base and sales volume. But those who do not have experience accepting customer payments online may be wondering about the ins and outs of processing e-commerce payments.
As with brick-and-mortar transactions, e-commerce payment processing requires a merchant account that allows you to receive credit card and debit card payments for your goods and services. While getting an online merchant account is technically no different from setting up a merchant account for a brick-and-mortar store (or might even seem more straightforward, given that you don’t need a credit card machine), in truth, there are numerous hidden complexities that can add cost and confusion for business owners. That’s not to say accepting payments online is inherently costly or complicated – but some providers make it more so than it needs to be.
If you’re looking to start processing payments online by integrating to an Internet merchant account, these five tips can help you avoid needless costs and hassles.
Just because you will need a new dedicated Internet merchant account does not mean you necessarily need to work with a new provider. You can streamline the process by first checking if your existing merchant account provider also offers e-commerce accounts. Working with the same provider can offer several benefits. First and foremost, you will already know if you are happy with your existing provider – and if they provide the features, transparency and support you need – and thus there may be less risk than trying someone new. Working with the same provider can also speed up or eliminate the application process, as you will already have a track record with your provider, and can reduce the bills and paperwork you have to manage every month.
While brick-and-mortar transactions only require a merchant account to be processed, there is an extra provider required for online transactions. This is called a Payment Gateway provider. Your Payment Gateway is the silent connecting piece that communicates transaction and approval details between the various parties involved in online transactions, including the Card Association and your merchant account. While standalone Payment Gateway providers do exist, integrating to an Internet merchant account with a provider that also offers Payment Gateway services can help make things simpler by streamlining your monthly billing. Even better, it can save you money.
Standalone Payment Gateways typically charge both monthly service fees for administering your account and providing the software. These costs are in addition to transaction fees. But because an all-in-one Merchant Account Provider is already benefiting from your business, they may not need to tack on additional fees. As not all Internet Merchant Account Providers do offer Payment Gateway services for free, it’s important to clarify up front.
After you find an all-in-one Merchant Service Provider and Payment Gateway, shopping cart software is required to host the products or services you want to sell. Shopping cart software run the gamut when it comes to abilities. Some do simple product management, while others can provide inventory management, analytics and more. The shopping cart will communicate with the Payment Gateway, so it’s pertinent that the software is integrated with the gateway. If not, the experience for online shoppers will be very poor, and it will mean slow cash flow for your business.
Though the problem is not unique to Internet merchant accounts, another potential headache is getting locked into a contract with a provider whose services or fees aren’t making you happy. If that happens, you’ll either have to pay a penalty to change providers mid-term or be stuck with an account that doesn’t meet your needs until your contract expires. While the best way to avoid early-termination fees is to find a provider you don’t want to quit, looking for an Internet merchant account with a company that offers month-to-month, pay-as-you-go billing will eliminate any potential headaches. You may also find that a provider who doesn’t lock you in goes to further lengths to offer online merchants a stellar experience so that month after month, they choose to stick around.
The notion of processing card-not-present transactions online might have you concerned about fraud – or getting downgraded to higher rate tiers. But the right Internet Merchant Account Provider should offer tools to mitigate these risks. Look for a provider capable of collecting AVS (Address Verification System) and CVV (Card Verification Value) information, which checks that the billing address attached to a card and the security code printed on the physical credit card are correct. This verification has a double benefit: it helps to confirm the authenticity of the purchase and, in the case of AVS, can lower the fees on the transaction. Some providers also have remote signature capture capabilities, which can be especially important to reduce losses on high-value merchandise as a signature is one of the best protections against a chargeback.
Have you recently integrated an Internet merchant account into your business structure? Was the process easier or harder than you expected? What tips do you wish you’d known before making the move?