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Guide To Accepting Credit Cards On Your Web Site

Giving your customers the option to pay for purchases from your web site with a credit card is crucial to your success at selling on the web. Simply put, credit card transactions are used to complete the vast majority of web sales. This article explains the options available to you when choosing a method of accepting credit cards. You'll also learn the differences between bank merchant accounts and online payment services.

Merchant accounts

Bank merchant accounts provide credit card processing for the majority of web sites today. These are business accounts (usually) set up through regular banks. Here is how a typical  transaction takes place when using a merchant account:

1 - The customer initiates a purchase from a web site,

     usually by "checking out" with a shopping cart.

2 - The bank that supplies the merchant account

     "authorizes" the purchaser's credit card, checking

     for fraud and verifying that the card has enough

     available credit to pay for the purchase. This

     process usually takes just a few seconds.

3 - After the purchase is authorized by the bank, the

     merchant ships the merchandise to the customer or

     supplies him with a download link in the case of

     a downloadable digital product (such as an eBook

     or software package).

4 - After a few days the bank transfers the funds (less

     transaction fees) for the purchase into the merchant's

     bank account.

Advantages of using a merchant account:

  ·  Fees are usually low when compared to online payment

     services.

  ·  Fast turn-around time for getting your money into your

     bank account.

  ·  Merchant accounts are generally more trusted by

     customers than on-line payment services. This

     enhanced trust encourages more sales.

  ·  Merchant accounts offer greater flexibility to the

     merchant when it comes to the types of transactions

     allowed (web site, phone, fax, etc). Most on-line

     payment services limit your transactions to your

     web site or online auction.

Disadvantages of merchant accounts: 

  ·  Merchant accounts can be difficult to qualify for.

     They have stringent personal and/or business credit

     requirements. They also tend to be picky about the

     types of businesses that they accept.

  ·  It takes a while to get your account approved and

     set up. This can easily take anywhere from a couple

     of weeks to a month or more.

  ·  There is usually a relatively high application fee and/or

     set up fee. Around $300 seems to be the norm.