Online Payment Processing Options

Only few e-commerce initiatives can exist without a means to process payment immediately after purchase. In order to succeed online, 99.99% of the people who read this are going to need to find an online payment processing option that takes traditional credit cards as payment.

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Anyone who buys online has heard the online horror stories and already comes to you with a built-in hesitance to buy online. If the payment processing element of your e-commerce system was obviously integrated to save money or put in place because you are "not sure yet," this will come through loud and clear to your customer and result in lost sales.

Although it is the most popular avenue for most e-commerce efforts, this does not immediately mean a traditional merchant account. There are other options for taking payment online as unique as the Internet, and we'll examine a number of them here.

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One of the biggest mistakes I ever made online was not doing my homework when I signed up with my initial merchant account provider. When you sign up with someone to handle your financial transactions, do you homework, check references, and always read the fine print.

Merchant Accounts

The most popular form of online sales is e-commerce by credit card sales. Merchant accounts are accounts with banking establishments that enable you to take credit cards at your place of business. We list a few options in the following sections.

NOTE

Most legitimate merchant accounts charge a different percentage rate based on the type of sale you are making. A face to face transaction in a store where you can check signatures, and so on will always be less than an online transaction.

Wells Fargo

Wells Fargo provides merchant account services to many U.S. based businesses and has quickly positioned itself as a leader in this industry. Its online toolset is considerable, but the capability to deal with people face to face by walking into a local branch is also powerful.

More information can be found at http://wellsfargo.frontpagelink.com.

Internet Marketing Center

The Internet Marketing Center has provided Webmasters with numerous Internet related tools and services for years. It has helped many Webmasters get merchant accounts through their connections online.

More information on its recommendations for merchant account services can be found at http://imcmerchantaccounts.frontpagelink.com.

PayPal

As mentioned previously, PayPal provides an option for traditional credit card sales, but also allows for users to take credit cards through their Premier and Business Accounts. As a result, many business users utilize their PayPal relationship as a merchant account alternative.

PayPal Good and Bad

By the very nature of what PayPal is and the system developed around it, paying by credit card through PayPal will never be as "easy" as paying through a traditional merchant account connection. Some customers won't feel that the extra effort is worth it.

I strongly recommend a two-step approach to PayPal in any e-commerce efforts: 1) sign up for a PayPal business account immediately because the capability to "take PayPal" will increase your market share among the service's fans, and 2) find a traditional merchant account provider to handle the bulk of your transactions.

In addition, PayPal can provide an "alternative" merchant account option for whatever problems arise from you existing account. This could include anything from users who can't figure out your existing system to users with credit cards (such as American Express) that you can't accept through your current merchant account.

FrontPage Cart, mentioned earlier, lets you take both credit cards and PayPal payments through the same interface.

Clickbank

Clickbank has quickly positioned itself on the Internet as a service that provides Webmasters with the ability to take credit cards (and echecks) at their Web sites without the costs and hassles associated with a traditional merchant account.

Clickbank's service is limited only to electronic goods and services, but it provides a solid alternative for people in that market. In addition to this alternative merchant account solution, Clickbank also integrates an automatic affiliate program into its sales process.

More information can be found online at http://clickbank.frontpagelink.com.

Payment Gateways

A merchant account is merely an account with a bank that enables you to take credit cards. In a brick and mortar store, you connect to your bank to take credit cards through a terminal. Online, this is done through a payment gateway service.

The most common of these gateways is Authorize.net. Your merchant account provider will tell you which payment gateways it works with. Payment gateways almost always carry an additional service charge.

More information about Authorize.net can be found at http://an.frontpagelink.com.

Alternatives to Merchant Accounts

Merchant accounts can be costly. Signup and monthly fees can quickly add up in price. In addition, many merchant accounts contracts require term lengths of a year or more. For those wanting to only do a small amount of sales online, there are companies and services that provide alternatives to traditional merchant account contracts and stipulations.

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If you do more than just a few sales online, the merchant account "alternatives" are seldom cheaper than a traditional merchant account. These companies make their revenue stream from the per-transaction charges, and when they stack up, you seldom benefit.

These companies usually charge a single sign-up fee and then a per transaction fee usually higher than a traditional credit card discount fee, but without merchant account requirements.

Two options are examined in the following sections, but be aware that there are others. As always, do your homework and run the numbers when investigating these options.

Serious About E-Commerce?

If you expect anyone to give you his hard earned money through e-commerce (or any other endeavor), you've got to convince him that you are serious about what you are doing.

Whereas it might seem a little scary to spend money on a merchant account, you need to realize that smart shoppers know the difference between you taking their money and working with another service to do the same. They know when you are using a third party, and they know that that means.

Get serious about e-commerce; it is a serious business.

2CheckOut

2CheckOut provides a way to take credit cards online without any long term contracts or monthly fees. It also provides a free basic shopping cart program.

More information about 2Checkout can be found at http://2checkout.frontpagelink.com. At the time of publication, 2Checkout requires a $49 setup fee and charges 45 cents and 5.5% of transaction per sale.

PayPal

As mentioned previously, PayPal provides a way to accept credit cards with no up-front fees at all. Its process is a bit cumbersome, but you can't beat its availability and startup prices.