How to accept credit card payments on your website

Are you going to sell products or services on your website? Whether it's a monthly subscription or just one-time purchase, accepting credit card payments is a must. According to statistics, users prefer to make online transactions with their plastics. The average size of credit card orders is up to three times larger than cash and check orders. So you simply can't compete if you don't accept credit cards. 

Even though each credit card transaction will have a cost associated with it, you are likely to earn an additional revenue stream. The ability to accept credit cards will boost your sales because impulsive buyers can make purchases immediately. Do you know that you can expect your sales to increase up to 400%?

Another benefit of accepting credit cards online is that you can avoid bounced checks. When you process the payment, you will know immediately that your customer has enough funds to make the purchase. 

Finally, the ability to accept credit card payments accords retailers with a certain amount of professionalism. It will give your business more credibility because people believe that paying with plastics is more secure than paying with cash and checks. 

The ways to accept credit card payments online 

Basically, there are two ways to accept credit card payments on your website. 
•    Using an internet merchant account. The merchant account for Internet transactions will enable you to accept Visa, MasterCard, American Express and Discover. 
•    Through a third party processor. There are a lot of companies that can accept credit cards payments on behalf of your company and handle the setup, billing and ongoing support. The payments are processed through their own merchant accounts. 

Internet merchant accounts 

If you want to open a merchant account, contact a bank or a company that offers payment-processing services. Typically, you will need to provide basic information about yourself or your business such as your business name, address, e-mail address, phone number and estimated sales volumes.

Every merchant account charges fees: a discount rate, transaction fee, gateway fee, statement fee, start up fee and others. They will vary depending on many factors, including the length of time you have been in business, the type of business you are in, the percentage of your sales, your personal credit rating, the average dollar amount of each sales transaction and the total dollar amount of sales per month.

There are many types of merchant accounts available online: Merchant Plus, PaymentMax, Chase Paymentech, GoEMerchant, Charge.com, GotMerchant.com, Electronic Transfer, Paynet Systems, Intransact, Authorize.net, Merchant Warehouse, Total Merchant services, Merchant Account Express and others. You should spend some time researching the right bank or merchant services provider since their rates will vary.

Third party credit card processors 

If don’t want to open your own merchant account, you can still accept credit card payments by using a third party company. They will verify the card account information and process your credit card orders for you. 

The main advantage of third party processors is low cost. There is usually no need to pay for expensive processing software or monthly maintenance. Third party companies charge just a processing fee for each transaction. It usually varies between one percent and three percent. You will receive your payments minus this commission. 

There are many third party services that process online payments. However, they are not created equal. Research your choices carefully and make decision based on what your customers would prefer and your small business can afford. 

Here are some popular third party credit card processors that you might want to take into consideration:

•    Paypal.com. PayPal is the best known option to accept credit cards online. It is safe and secure for both sellers and buyers. Customers can make payments with credit card, debit cards and bank transfers. There are no monthly, set-up, or cancellation fees. Business accounts are charged 1.9% to 2.9% + $0.30 to receive funds. 
•    Propay.com. ProPay provides simple, safe and affordable credit card processing and electronic payment services for businesses ranging from solo entrepreneurs to multi-billion-dollar corporations. They have over 1 million merchants boarded. 
There are three types of business accounts: basic, premium, premium plus and platinum. The charges start from 2.69 % + $0.25 to move funds to your account. However, there is a pesky annual fee (starting from $34.95).  
•    MoneyBookers.com. Moneybookers is an electronic alternative to traditional paper methods. It performs payment processing for websites, online auctions, and other corporate users. The customers can make payments using their credit cards, debit cards or bank accounts. If your estimated monthly volume is between €0 and €1,000, the fee is 1.9% + 0.29€ (Moneybookers e-wallet) or 2.9% + 0.29€ (Moneybookers Quick Checkout). 

Should you have a merchant account or third party processor?

For most businesses the decision depends on the size of the company and sales volume. Small businesses are better off with a third party credit card processor. The advantage is that they will take care of everything for you - verify the card, process the payment, and send you a check at the end of each payment period. 

Generally, you will pay the least with a third party provider because of the absence of monthly fees. However, this arrangement may also result in the longer waiting periods to actually receive the money.

A third party processor is also convenient to use when you don't know if you can actually gain profit. You can always move to a more complex, more expensive, and possibly more reliable service later on if your business grows. 

A full Internet merchant account is a good choice for larger businesses with a bigger turnover. You company will seem to be more established than those online businesses that use third party processors. However, you have to be very careful to avoid credit card risks because you will process the payments yourself.

Having a merchant account, you will pay more start up and monthly fees, but your discount rate per transaction will be lower than with a third party credit card processor. That’s why this payment option suits businesses with large sales volume.

Accepting credit card payments plays an important role in the success of online business. It will increase your revenue and simplify business operations. While it is true that customers can still buy your products or services if you don't accept credit cards, you will significantly boost your sales by offering to make payments with plastics.