Know Who’s on Your Side
In the eCommerce credit card processing game, there are five players. In order to have a happy transaction, you should understand what role each one plays and the benefits and disadvantages of using them. There’s you (1) and your merchant account provider (2); these are the participants that want you to have the biggest and most profitable transactions! In order to have the healthiest business, you’ll want an online form of taking payments, which means you’ll need a payment gateway (3). Credit card associations (4) and the banks (5) that issue them are the last two players.
Your Merchant Account and You
A merchant account is essential for eCommerce credit card processing. Luckily, you and the merchant account provider both want the same thing; a growing, wholesome business! When searching for the right one for you, you’ll want to speak to a Certified Payment Professional (ETA CPP), which is a merchant account sales rep who has been vetted and credentialed by the Electronic Transaction Association and has the expertise to handle your situation. You’ll want to discuss your business plans, what products/services you’ll be selling (to make sure it is approved by the processor), how much processing volume you’ll need to start out (all merchant accounts have limits), and you’ll want to discuss how to prevent chargebacks and fraud. Be careful to keep your chargebacks to a minimum. Visa requires payment processors to enforce a rule that merchants keep their fraud-to-sales ratio below 1%. Just know that if your fraud chargeback volume exceeds 1%, then your merchant account has been flagged by the risk department and you’ll need to quickly get your chargeback levels under control, or else your merchant account is at risk of termination. ECommerce credit card processing tends to have more chargebacks than other types of processing because it is much easier to commit fraudulent purchases online than in-store. Plus, shipping delays, address errors, and damaged goods from delivery can result in unhappy customers.
Payment Gateways
This is not as fictional and mysterious as it sounds. A payment gateway is simply the tool used to receive payments on your site. A payment gateway is essentially the small boxes where customers input their credit card information before clicking “check out”. In a more technical sense, it is the piece of internet technology that connects your shopping cart to your merchant account and keeps your customer’s credit card data encrypted and safe as it travels along the path from your website’s shopping cart along to your merchant account provider.
- You may get reduced or eliminated gateway fees.
- You’ll possibly have 1 support department to call who can assist with both the gateway and the merchant account.
- If a processing error ever arises, you’ll never observe the 3rd party gateway provider and the merchant account provider play “the blame game” with each other.
Credit Card Networks
The main 4 card brands are Visa, MasterCard, Discover, and American Express. After a purchase has been made, your merchant account provider will take the funds from the customer’s bank via one of these card networks.
Banks
On your credit card, you’ll notice a small logo of the bank that issued the card. The last step in eCommerce credit card processing is the card association transferring the funds of purchase from the bank that issued the card.
Other players to keep in mind are shopping carts and the hosted payment pages of your website. A shopping cart is actually just software that must be compliant with your payment gateway. As the name suggests, it allows customers to keep multiple items in their query before checkout. A hosted payment page is the page your customer is directed to when entering payment information. This page can be hosted on your website or it can be hosted by the payment gateway company. In compliance with security guidelines, it is this page that collects and processes card numbers and therefore it must be SSL encrypted.
Is eCommerce Credit Card Processing Worth the Risk and Effort?
We think so. After all, according to Fit Small Business, retail eCommerce is predicted to rise to over 735 billion by 2023! eCommerce credit card processing sounds complicated and risky at first, but the right processor will provide you with safety tools and education to ensure the satisfaction of your customers and you. Tokenization is one method that makes online payments safer. It refers to the substitution of numbers on cards for letters or special characters. When the information is entered into the payment gateway, it turns into another set of characters. This is a great option to use if you have repeat clients to your site who don’t want to reenter their credit card information for every purchase (think Amazon). Encryption will also keep card information safe. Card numbers are switched around and jumbled in a meaningless pattern that can only be decoded with a key. Without it, thieves cannot receive card information.
eCommerce can be a lucrative business model with far lower costs than traditional retail avenues. There are plenty of ways to stay safe in the eCommerce credit card processing game, but you’ll need the help of a partner that wants the same thing as you; a safe and profitable business. Your card processor is a valuable partner and allies out there, so check out what we have to offer: https://www.merchantcardservicespro.com/ecommerce/
