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Online Payments: Selling via Credit Card Online

Jonathan Beacher - Friday, September 30, 2011

Planning to sell items or services or collect payments online?

There are many ways to accept online payments with credit cards or e-checks:

  • Taking your customers outside your web site to PayPal Standard or Google Checkout using "buy now" or "pay now" buttons on your regular web pages.
  • Accepting credit card and e-check payments on your own web site by opening your own online credit card merchant account and subscribing to a payment gateway service.
  • Using shopping cart software within your web site, which can sell not only products but also memberships, services, subscriptions, downloadable items, etc.
  • Having Atlanta Web Design GA LLC write programming code to handle your transactions, usually needed when the information you need to collect requires a special form, or because you are handling out-of-the-ordinary transactions that require computations, recurring billing, etc.
Which method is correct for your web site depends on these factors:
  • How many kinds of items or services you need to sell via e-commerce
  • What is your expected dollar volume of online credit card payments in one month?
  • Do you already have a credit card terminal at your place of business, or plan to only use an online payment form?
  • Do you need recurring billing, where customers are billed in the future monthly, yearly, etc.?
  • Do you need to collect additional info from your customers, beyond their name, email, billing phone, billing address, and credit card info?
  • Are you charging customers for a membership to access private areas of your web site?
Now let's review these issues to decide your best alternative for taking online payments with credit cards and e-checks...

How many items or payment types are you offering?

If you are selling many products or many service choices, then it's usually best to install shopping cart software on your web site, since it can usually sell much more than products. Shopping cart sofware is best if you have to calculate shipping costs. Using shopping cart software means we can avoid costly programming time to write our own software to handle your transactions. We offer a variety of shopping cart solutions (which will be described later in Part II of this series on online payments) such as Adobe's Business Catalyst, Ecwid, WP E-Commerce, Zen Cart, etc. Business Catalyst is the top-of-the-line shopping cart solution with wonderful features that let you sell unlimited products for $39 a month, with no additional fees (we always avoid shopping carts that charge a high monthly fee or worse a percentage of sales.) Ecwid, WP E-Commerce, and Zen Cart are free to use, but have their limitations. If you are only selling a few items or services, it's usually wiser to use an online service like Google Checkout or PayPal Standard. Our web developer time to install Google Checkout or PayPal Standard is minimal. You do not need to purchase a secure sockets layer certificate (SSL certificate) for your web site, because the credit card payment info isn't collected on a form on your web site, but rather by taking the customer to Google or PayPal's web site to pay. (Of course, some merchants prefer having the customer pay and remain within their own web site, not on an external web site.) If the customer is only buying one item at a time, the easiest way is simply adding a Google or PayPal Standard buy now (or pay now) button within your web page. If your customer needs to purchase more than one thing in one order, then a step up is using Google's virtual shopping cart, which adds a pop-up cart running on Google's server atop your web page, needed if your customer needs to buy more than one thing at a time. There may be some drawbacks to using Google Checkout:
  • Your customer must create or have a Google account.
  • Google stores the customer's info on their server, not on your web server, so you do not have access to all the customer's information (like email address) unless the customer allows you to have it. Otherwise, Google handles the transaction for you but keeps some customer info private.
  • You have to log your Google Merchant Account to see your transactions.
  • Some automated or necessary features you might have with regular shopping cart software won't exist with Google Checkout, which has limited functionality.

What is your expected monthly dollar volume for online payments?

If you will have less than $1200 a month in credit card sales, it is usually cheaper to not get your own credit card merchant account and instead use PayPal Standard or Google Checkout to handle your transactions. This is because they do not charge any monthly fee or monthly minimums, and there is no one-time charge to open an account. If you have more than $1200 a month, then PayPal Standard and Google Checkout can be more expensive. Their top rates for under $3000 a month in sales are 3.1% of the sale plus a transaction fee, costing about $3.40 on your $100 sale. By comparison, we can establish your own credit card processing at Authorize.net where your fee is always 2.19% of the sale, plus a 35-cent transaction fee per order. However, when these fees don't exceed $25 a month, you will be charged a $25 minimum regardless of how few sales you had. (This is why Google and PayPal Standard are cheaper if your web site has low monthly sales.)
PayPal offers PayPal Standard which has no monthly fees but a 3.1% fee, but also offers other options that let customers pay on your site without going to Pay Pal to pay: PayPal PayFlow Payment Gateway, and PayPal Website Payments Pro. However, the rates for these are not as low as Authorize.net, which is why we recommend Authorize. Authorize.net is similar to PayPal Payments Pro but less expensive.
There are also other fees for having your own credit card merchant account. You need two components to process credit cards online, a payment gateway and a merchant bank account.
  • The payment gateway service checks the customer's credit at the time of purchase, and authorizes the sale by removing the sale amount from the customer's credit.
  • When you later ship or deliver the product or service, only then may you capture the payment to have it transferred to your merchant bank account. This is a special bank account that only receives your online transactions, with no other transactions allowed except the periodic withdrawals to move the money to your regular business or personal checking out. The special merchant bank account is required so all transactions can be easily audited if necessary.
After you are done reading this article, read our page explaining how to apply to open an account with Authorize.net Atlanta Web Design GA usually recommends our customers order their payment gateway and merchant account through us from the provider we consider to be the low cost value, Authorize.net, which is one of the very largest online credit card processing firms. You cannot buy direct from Authorize.net; you must order through an authorized reseller like ourselves. We prefer their service not only because it's the cheapest but because we know how to implement it. That means we get your web site transactions working quickly, without having to bill you for unusual web development time to hook up another system that is problematic. Your fees for Authorize.net are published online. At the time of writing, you pay $9.95 a month for a merchant bank account where the payments are deposited before they are moved to your own business or personal checking account. You also pay $17.95 a month for the payment gateway service to authorize the transactions. There is a one-time application fee of $99 to create your account. If you are thinking of just going to your local bank to sign up for online credit card processing, think again. Most big banks are simply charging you more to rebrand the exact same services from the same providers you can buy at a discount through Atlanta Web Design GA. Your card processing rate may be 2.4% to 2.5% from your local bank compared to 2.19%, and your monthly fees will be higher as well. In addition, you will need to spend $29 a year for an SSL certificate to make your web site able to handle secure credit card transactions, so the page collecting the payment info appears in your browser as https:// not http:// and there is a lock symbol shown in the browser indicating the data being collected is encrypted and difficult for hackers to steal. An advantage to having your own credit card account is your customers get a better experience because they pay within your own web site, and you get to collect and keep all the customer's records in your own database on your own server. After you are done reading this article, read our page explaining how to apply to open an account with Authorize.net

Do you already have a credit card terminal?

If you already process credit cards with a terminal at your place of business, you may think you can use your existing account to handle your online transactions. That isn't the case. Banks charge higher rates for online credit card transactions, because they consider the payment to be riskier than when the customer is face-to-face with you with their plastic credit card present. "Card present" transactions are as cheap as 1.6% of the sale, whereas the cheapest online transactions are usually about 2.19%. Online accounts are similar to "moto" accounts which stands for mail order telephone order transactions. A credit card processor requires one account for "card present" payments and another account for "moto" payments. There is a simple work around, of course, if you already have a "card present" account and a credit card terminal and don't wish to open a second "moto" account. You can manually key in the credit card number and verification codes into your credit card terminal, after collecting that payment info online in a web form. You will still need an SSL certificate to collect the payment info in your online form. You'll receive an email notice or SMS message to your cell phone whenever a payment request is made online, then you'll need to log in to your web site to get that payment info to manually key into your in-store terminal. (It's not safe to email payment info to you, since unless the message is encrypted hackers could steal the credit card data in an ordinary email message.)

Do you need recurring billing, where customers are billed in the future monthly, yearly, etc.?

If customers are subscribing to a service, or purchasing products delivered every month or year, then your options are more limited. PayPal Standard can handle some kinds of simpler recurring subscriptions whereas presently Google cannot. Some shopping cart software can sell recurring services and products, many cannot. If your recurring billing has out-of-the-ordinary parameters, you may need Atlanta Web Design GA LLC to write your own software to setup up Automatic Recurring Billing in a service like ARB offered by Authorize.net.

Do you need to collect additional info from your customers?

Shopping cart software, PayPal Standard and Google collect only the typical info associated with a sale, like customer's name, billing address, shipping address, email, and phone. If you need to collect additional information you need a payment tied to a customer data entry form, so you can ask any kinds of questions needed. Depending on your needs we may have a lower-cost solution involving ready-made software we can integrate with your web site, or we may need to write a customer program to collect info and process your transaction.

Are you charging customers for a membership to access private areas of your web site?

If the customer's payment gives them access to special areas of your website, like member's pages or access to download products or obtain an online service, then we usually have to write custom software for your web site.
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