Is Online Credit Card Processing Safe?

By Author: Hugh Springer
Total Articles: 4762
Comment this article

At first glance, a credit card merchant account would seem like the definite way to go for most online merchants. It allows you to accept customers' credit and debit cards right on your website, allowing for rapid and easy online transactions; in contrast, additional steps are involved when customers pay by phone, mail, or via a third-party payment processing site.

But like anything else in business, there are pros and cons to credit card processing.

Some might say that one negative to a merchant account is the cost. You have to pay a fee for the convenience of processing credit cards online. While it's true you'll be giving up a small percentage of your profits in order to accept credit cards online, this is essentially just the cost of doing business. Few merchants would count advertising as a "con" in doing business, and a credit card merchant account has a similar role; it's an expense incurred to generate a greater profit. By offering your customers the fast, simple checkout option of credit card payment, you're taking steps to enhance their online shopping experience and hopefully win their repeat business. ...
... Taking into account that your merchant account expenses are merely a percentage of your profits, it looks like the costs of the account offer no financial risks.

Then there's the biggest concern: online fraud. Is online credit card processing really safe?

Online credit card fraud and identity theft are probably the most panic-inducing fears to strike the Internet since the Y2K bug a decade ago. Obviously, you don't want to be out of pocket if your entire inventory is illegally purchased by a hacker with a list of swiped credit card info. So realistically, what kind of a threat can fraud pose to you and your business?

Although you might never be 100 percent safe from scammers, there are enough safeguards in place to give you peace of mind every time you accept a credit card payment online. These safeguards are for the most part initiated and monitored by the credit card companies and serve the dual purpose of ensuring your customers a safe online shopping experience, as well as protecting your credit card merchant account from frauds and scams:

1. Account Monitoring: Most credit card companies monitor both their cardholder and merchant accounts. Suspicious account activity raises red flags that can prevent a potentially fraudulent transaction and alert the merchant before any damage is done.

2. Security Codes/Information: Most credit card purchases require the small number printed on the back of the card in addition to the actual card number as a means of validating that the person making the purchase is the actual cardholder. This can extend to further verification, such as an address or zip code.

3. Fraud Rating: Many credit card issuers can now automatically review a card's activity in order to calculate the likelihood of fraudulent usage. This provides an additional step after Account Monitoring to flag a suspicious purchase.

So if you open a credit card merchant account for your online business, you're automatically set to protect both your business and your customers from the online criminal element.

Credit card merchant accounts offer three huge benefits for helping an online business prosper. First of all, convenience is key. Customers are more likely to spend money on your site and give you repeat business if their shopping experience is hassle-free. Unlike a third-party payment processor like PayPal, a credit card merchant account allows for one-stop shopping without visiting another site. You can even offer customers the option of saving their credit card info to their account on your site, thereby eliminating the need to re-enter all of their information between visits.

Another benefit is speed. Merchant accounts allow customers to make their purchase in the most expeditious manner possible. This allows you to ship their product almost immediately, and everybody's happy.

The third big benefit is the result of the first two. When your customers enjoy a fast, convenient payment method, studies have shown that they tend to spend more, both by visiting your site more frequently and making more purchases per visit.

Are there risks to an online credit card merchant account? Sure. But are they minimal and greatly outweighed by the benefits? You can bet on it.
About Author:
At Card Processing Pros.com we provide credit card merchant 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.