Selling on the internet would not be the same without the ability to accept credit card payments online. Websites that offer this service can capture impulse buyers and international buyers as well. It is convenient and expedient for both buyers and sellers. Setting up online credit card payments is not that difficult, especially as there are many alternatives available.
Merchant accounts are the key to e-commerce. Sellers have two broad options: open a merchant account on their own, or use a third party merchant account (or “payment gateway”). These alternatives have implications for fees, expenses, fraud risk, and how consumers interact with your site.
♦ Individual merchant accounts
To open a merchant account of your own, you need to deal directly with a bank. Naturally, there are certain fees and charges involved, since commercial banks are not non-profit organizations. In relation to using a third-party merchant account, the start-up fee is higher. However, the transaction fee is lower compared to the third-party merchant account.
Security is a major issue when setting up your own merchant account. It is not sufficient for buyers to recognize that your site is legitimate, it must also be protected. When using your own merchant account, customers are required to use their credit card information on your site. This allows payments to be made directly to the merchant account.
♦ Third-party merchant accounts
Third party accounts, or seller accounts, allow you to register with a third party site that serves as a medium between the seller and the buyer. A popular third-party account is PayPal. Using a third-party account has several benefits. Buyers would be more comfortable in purchasing at the site, the start-up fees are lower, and they might facilitate order buttons. Some websites can facilitate payment by a third-party account only, but the disadvantage is that buyers would need to open their own before buying, which can be a hassle.
Besides PayPal, there are several other merchant accounts existing. ProPay, CCBill, Google Checkout and RegNow are just some of the payment gateways that are available. This option should be utilized if one is just starting out and wants to assess the online business before incurring the expense of an individual merchant account.
Once the merchant account is set up, your website should have an order page that produces an invoice. It should include transaction charges and provide the buyer with the full cost of the transaction. Many websites give buyers the option of paying by credit card or through a third-party merchant account. This can be quite handy in getting more sales and international buyers.