Taking Credit Card Payments Online - Costs, Liabilities, And Guidance

By Author: Hugh Springer
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Studies show more than 85% of all online transactions are paid for by credit card. If, like most astute business owners, you are increasingly turning to the web as a primary marketing method, then it may make sense for you to consider accepting credit card payments online. To ensure that you do so in a secure and cost-effective way, there are a few things that you should know and consider when setting up an online payment system.

The Three Things You Will Need to Accept Credit Card Payments Online

Online credit card payment systems are made up of three separate elements. You first need to apply to become a credit card merchant. This will allow you to accept a variety of credit cards such as Visa, Mastercard, American Express, Diners Club and Discover. Once approved, you will be linked to a credit card processor. The processor's purpose is to obtain authorization to deduct the funds from a client's card, route the transaction for settlement, and facilitate depositing the funds into your bank account. The third element, and this is the essential difference of being able to accept payments online, is that you then ...
... need to have a payment gateway. The gateway is a secure portal that links to the back end of your shopping card. Its purpose is to record the client's card details securely, and transmit the transaction for authorization and processing.

What Costs Are Associated with Accepting Credit Card Payments Online?

Most good service providers do not charge for you to set up an account and packages often include the software systems. Instead, they make their money from processing fees associated with online transactions. The fees vary between different service providers. A standard transaction is charged as a once-off fee plus a percentage of the actual transaction. A good service provider will charge about 1.7% for retail brick and mortar merchants and 2.39% for internet merchants. As well as per transaction fee this is usually around 30 cents. Some systems allow you to process manual transactions online. This can save you the cost of having an additional retail terminal. When you review your operational costs, you may discover it is more cost-effective to process payments online. This is particularly true since the systems can be easily integrated with your invoicing and accounting system.

The Advantages of Accepting Online Credit Card Payments

Credit cards are undoubtedly the most convenient way of transacting which is why most customers prefer to pay this way. Online payments make this even more convenient. Clients can make purchases online, 24 hours a day, 7 days a week. As a business owner there are benefits for you too. You can receive payment for products directly into your bank account within two to three days. Because an approval code needs to be obtained before a transaction can be processed, you know with a fair amount of certainty that the client has the means to make the purchase.

What Are the Associated Risks and Liabilities with Accepting Credit Card Payments Online?

Naturally, there are some risks associated with accepting credit card payments online. The main thing that you need to be aware of is that as soon as the card payment is processed remotely, the risk of fraud increases. When looking at service providers, make sure that they have extensive and up-to-date fraud protection tools as part of their package. This may include components such as a Duplication Detector which picks up if someone should double click through checkout. Other components could include a Fraud Profiler, Address Verification System, and a Card Code Verification System. For someone who is new to the world of credit card merchants, it's important that you familiarize yourself with all aspects of credit card fraud. To help you, your service provider should have a help desk that can answer your queries and provide you with valuable information on fraud prevention.

How to Find an Online Merchant Service Provider

If you have an existing merchant account, find out from your service provider if they have an online payment gateway. Alternatively, if you are starting from scratch, a simple online search will bring up the top service providers. With a small amount of research, you can compare products and costs to evaluate what will be the best system for your business. Keep in mind the points discussed above, as they can help you make a more informed decision.
About Author:
At Card Processing Pros.com we provide merchant credit card processing services and debit card processing, literally setting up hundreds of clients per month to process card payments for storefront, Internet and phone/mail order-based businesses. We also offer services in electronic check and gift card processing. Visit online today.