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Get Set for E-Commerce Payment Processing |
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Written by Nora Caley
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 | | homebusiness |
The Basics on Accepting Credit Cards and PayPal Online
You don't want customers just to visit your web site. You want them to buy. According to a study by Forrester Research, people spend 15 percent more online than they do in the average brick-and-mortar purchase. If you add a payment system to your web site, customers can place their orders online and pay with their credit or debit cards, their bank accounts or their PayPal accounts.
Look for a MAP
Setting up your business for e-commerce takes a little research. First, you have to find a merchant account provider (MAP) which processes online transactions, verifies your customer's credit card, and deposits the money into your business' bank account. To find a MAP, do a web search for a merchant account provider, ask your business-owning friends to recommend a company, and talk to your banker. Some MAPs are connected to banks, and others are independently owned. The latter might offer cheaper rates, but it could take a day or two longer for the money to hit your account. Some MAPs accept Visa and MasterCard only, and not American Express or Discover. An alternative to the MAP is PayPal, a service that enables anyone with an e-mail account to accept payments online. PayPal is owned by eBay Inc. Select Your Shopping Cart
In addition to the MAP, you need a shopping cart, a place on your web site where your customers place the items they plan to buy, then pay when they checkout. You can find a list of third party shopping cart providers on the PayPal web site (www.paypal.com) or by doing a web search for shopping cart software. Shopping cart software allows customers to set up accounts on your web site, so you can offer them special promotions when they sign in. The software also allows you to group your products into categories on your site, making it easier for your customers to find (and buy) your items. Make sure the MAP and shopping cart software are compatible with the software you use with your web site. Also, look for features such as modules that show your customer what's on sale or which items are similar to products they bought. If you ship products, make sure the shopping cart software interfaces with the shipping company you use. Also make sure the system protects your customers' credit card information. Some programs even help you track your inventory. Maximize Your Dollar
Get price quotes from several MAPs before you choose one. MAPs charge various fees, including a set-up fee of a few hundred dollars, monthly fees of $20 or more, and software licensing fees. There are also transaction fees of about 20 to 70 cents per transaction. Some MAPs also charge certain penalties and other fees. There's also a discount rate, the two or three percent of each transaction that the MAP keeps. Shopping cart software can cost a few hundred dollars to buy, or about $100 to $150 to rent, plus up to a $150 set-up fee. Look for a set-up wizard to make it easier for you to install, automated e-mail confirmations, order tracking, and other features. Instead of having the customer pay immediately with a credit card, you can use a Point Of Sale system, which means you have to input the credit card number yourself into a separate machine that you rent from the MAP. The equipment costs a few hundred dollars to purchase, or $15 to $50 a month to lease.
The PayPal Advantage
With PayPal, you don't need an MAP, and your customers don't need a credit card. They can pay with a bank account or a PayPal account.
PayPal offers various merchant packages. The simplest is E-mail Payments, which means you can invoice your customers with e-mail and accept their credit card payment, even if you don't have a web site. PayPal's more elaborate packages have other features such as charging your customers a subscription or other regular payments, accepting Canadian dollars, even setting up a shopping cart for you. There are also fraud detection and chargeback protection features. PayPal charges a transaction fee of about 3 percent, and some packages have monthly fees. HBM
Nora Caley is a freelance writer based in Denver. She specializes in business articles.
Previously published in the June 2007 issue of HOME BUSINESS® Magazine, an international publication for the growing and dynamic home-based market. Available on newsstands, in bookstores and chain stores, and via subscriptions ($15.00 for 1 year, six issues). Visit www.homebusinessmag.com |
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