Internet Credit Card Processing Resource

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Credit Card Processing on the Internet By: Jay B Stockman So you have finally finished your e-commerce web site, hired the best web publisher, added all the bells and whistles, outstanding graphics, and great merchandise. Now, how does your prospective customer pay you for your products? Clearly, it is necessary for your site to accept, and process credit card payments, in real time. Failure to do so, would result in a failing enterprise. Before you can begin the application process, there are several standards that all credit card processors have set. Follow this checklist and you will save yourself a significant amount of time, and aggravation. Plan ahead, avoid frustration, and provide your customers with an easy, secure experience that will make them come back for more. 1) The checkout, and transaction pages must be secure. This protects the customer from credit card, or identity fraud, which has become epidemic. You achieve this "security" by installing a secure socket layer certificate, or SSL. SSL encrypts information being entered on your site as it is sent across the Internet, so hackers are unable to steal the transmitted information. This Certificate has become very common, and any web host would be able to assist you. 2) A robust Shopping Cart software that utilizes the highest degree of security, and is compatible with the credit card processor. This program must be able to receive, and process orders. Collect personal data, and securely transmit the credit card data from software to the credit card processor. Most importantly, the software should provide the building blocks for a complete, successful customer experience. 3) Your server must have a firewall, especially if you plan on storing the credit card information on your server. Basically, a firewall is a combination of software, and hardware, that inspects incoming data, and filters unwanted, or potentially destructive packets of information. This firewall will not allow hackers to enter your server, and steal sensitive information. When all these conditions have been met, you are ready to contact your bank to open a credit card merchant’s account. Once your account is opened, your bank will suggest a credit card Gateway. A credit card Gateway receives the customer’s credit card information from your web site, approves or declines the charge, and ultimately transmits money to your bank. Although the process appears to be very complicated, it is quite straightforward when you know what you are doing. Plan ahead, avoid frustration, and provide your customers with an easy, secure experience that will make them come back for more. Copyright @2005, Jay B Stockman About The Author Jay B Stockman is a contributing editor of Internet Credit Card Processing Resource For more details on Internet merchant accounts and Credit Card processors go to: http://myinternet-credit-card-processing.com/ Technorati Tags: processing, credit, credit card processing, accepting credit cards Add to: | Technorati | Digg | del.icio.us | Yahoo | BlinkList | Spurl | reddit | Furl | Credit Cards, Merchant Accounts, and Your Bottomline By: Tim Knox Small Business Q&A with Tim Knox Q: I'm opening a gift shop and want to be able to accept credit cards. I talked to the branch manager at my bank, but he didn't seem to know much about how it all worked. He did say that I would need something called "a merchant account" and something else called "a credit card processor." Beyond that he seemed as clueless as I am. I'm thinking about going to another bank. Can you explain how that all works? -- Mary Ann G. A: Mary Ann, I'm going to give your banker the benefit of the doubt and say that a lack of knowledge regarding the specifics of credit card processing is not necessarily a reflection of the banker's competence. I have found over the years that most bankers, no matter how experienced or knowledgeable about the banking business they my be, don't really know much about how credit card processing and acceptance really works. That's because the task of accepting and verifying credit card purchases is handled by third party service companies who process and deposit (or settle) the funds into a bank merchant account. The decision to accept credit cards is a wise one for any retailer. I agree with financial guru Dave Ramsey's teachings regarding the use and abuse of credit cards. Many people dig deep holes with credit cards that are hard to climb out of. But, from a practical business point of view, any retail business that does not accept credit cards is leaving money on the table. Research has shown that accepting credit cards increases revenue and helps with cash flow since you receive the money within a couple of days instead of waiting up to a week for a check to clear. Credit cards don't bounce, as some checks have a tendency to do. Credit card users are also more likely to buy on impulse and spend more when they do. Bad news for them, but good news for you. If you have a social conscience concerning the use of consumer credit cards, a retail operation probably isn't the business for you. To accept credit cards at a brick and mortar location you typically need four things. The requirements may vary a little, but the following applies in most cases. You will need: (1) A way to enter the customer's credit card information into a verification and processing system. This can be done with a swipe terminal, point of sale system, or by calling the credit card in by phone; (2) A credit card gateway company to verify the credit card's validity and process the payments; (3) A credit card merchant account in which the gateway company will deposit payments made to you; and (4) A business bank account into which the settled funds will ultimately be deposited for your use. Here's how the process works. (1) You make a sale and the customer pays by credit card. (2) Using a card swipe machine or telephone, you contact what is known as a "gateway company" who takes the card information you submit and verifies that the card is valid and the charge can be made against the card account. The gateway company returns an approval code for the purchase. With a swipe machine or point of sale terminal the verification process happens in a matter of seconds. If you're doing telephone verification it can take a couple of minutes. You call the gateway company, give them the credit card number and expiration date and they give you an approval code that you write on the credit card charge slip. Either way, the money is typically deposited in your merchant account within 24 to 48 hours (less fees, of course). You'll also need to apply for merchant status with each credit card company whose card you want to accept. To do business with American Express and Discover all you have to do is fill out an application, but to accept Visa and MasterCard you must have a merchant account. A merchant account is a special bank account set up for the expressed purpose of accepting credit card payments processed by the gateway company. Merchant accounts are usually associated with banks, though you can also use credit card merchant account service companies to perform the same function if you can not get approved for a bank merchant account. Applying for a merchant account at a bank is much the same as applying for a loan. The only difference is sometimes a loan is easier to get. There is the prerequisite paperwork to complete and pledging of the first born, followed by an approval process that can take up to several weeks. And you are not guaranteed that the bank will approve your merchant account, even if you have been a favored customer for many years. Banks have strict regulations regarding the granting of merchant accounts and if issuing you a merchant account in anyway puts the bank at risk of losing money, you will be turned down. Banks always make decisions based on economics, not relationships (no matter what your banker tells you). Requirements for qualifying for a merchant account varies among banks, but in general the bank will look at the following criteria: How long have you been in business? Business longevity suggests a history of stability, efficient management, and good financial health. What is your product or service? Does your product lend itself to a high rate of returns and chargebacks? A chargeback is a disputed credit card charge that is refunded to the buyer and charged against your account. You are accessed a chargeback fee that can be as much as $20 per event. If your business lends itself to high chargebacks, you will not get the merchant account. How's your credit report? Banks always look at how much you owe and how you pay your bills, so it's important to have good financial and trade references. If you have a history of late payments or defaults to vendors, it will count against you. What is your anticipated volume of sales and average transaction amount? The more money you make, the more money the bank makes. If you anticipate just a few credit card charges per week it may not be enough to justify the merchant account in the bank's eyes. Is your business categorized as a "high risk merchant?" High risk merchants are those with the highest instances of credit card fraud and chargebacks. High risk merchants include many types of internet-based businesses, telemarketers, travel and cruise businesses, and membership clubs. Being a high risk merchant dramatically decreases your chances of getting a merchant account with a bank. Being a high risk merchant doesn't mean that you can't get a merchant account from somewhere else. Thanks to the growth of ecommerce in recent years there are a number of alternative companies that will provide you with a merchant account, sometimes with more perks than a traditional account, but almost always with higher fees. Also, not all banks support internet merchant accounts. If yours does not, shop around for one that does. We'll take a look at accepting credit cards online in next week's column. Here's to your success. Tim Knox tim@dropshipwholesale.net For information on starting your own online or eBay business, visit http://www.dropshipwholesale.net About the Author Small Business Q&A is written by veteran entrepreneur and syndicated columnist, Tim Knox. Tim serves as the president and CEO of three successful technology companies and is the founder of DropshipWholesale.net, an online organization dedicated to the success of online and eBay entrepreneurs. Related Links: http://www.smallbusinessqa.com http://www.dropshipwholesale.net http://www.30dayblueprint.com http://www.timknox.com Keywords: cards, accepting credit cards, credit card, card processing, credit card processing, credit, credit cards, accept credit cards, card