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5 steps to taking credit
cards online
Accepting credit cards
online is imperative for successful e-commerce. It makes it easy for customers
to purchase from you, encourages impulse buying, reinforces your company's
professionalism and increases your chance of closing a sale.
Follow these steps to begin accepting credit cards for online sales.
1.
Decide what you need.
Many online businesses want to give customers a
wide range of payment options, and therefore pursue multiple credit card
issuers. The most common choices are bankcards issued by financial institutions
(Visa, MasterCard), and travel and entertainment cards such as American Express
and Discover.
Some businesses choose
card issuers based on how their fees are structured. For example, companies that
sell a small number of expensive items may be interested in an issuer that
charges a set amount per transaction, as opposed to a company that sets fees as
a percentage of total sales.
2.
Obtain online merchant
status.
To accept credit cards, you will need what is
called "merchant status" — authorization from the card provider that you can
accept its card.
Accepting credit cards on
the Web frequently requires a special type of merchant status. Called a
"card-not-present" account, this status authorizes you to process sales without
face-to-face interaction with customers. Even if your business accepts cards at
a physical location, it may need to re-apply for this type of account.
If you don't yet have a
merchant account, you will need to apply either with a bank or directly from the
card issuer. Bankcards require that you apply for merchant status through an
issuing bank. Entertainment cards grant merchant status directly.
If you're turned down by a
bank, consider working with an independent service organization, also known as
an ISO, which acts as a middleman between businesses seeking merchant status and
banks. ISOs often will accept more risk when granting merchant status than
traditional lenders, but their rates are likely to be higher. Be aware that ISO
charges can vary greatly, so be sure to talk with several before signing on.
3.
Choose a bank processor. Many bankcard issuers do not provide bank processor services — the back-end
functions such as billing, reporting, and settlement. This means you'll need to
find a company to handle these functions for your account. To ensure seamless
transaction processing, look for a company that supports the e-commerce software
your Web store uses.
4.
Decide on an authorization
method.
Transaction authorization can be done two ways —
deferred "batch" processing or real-time processing. Batch processing is done
offline at your physical location after a group of orders comes in, and may make
sense for companies with lower sales volume. Real-time authorization occurs
online immediately when an order is placed, and reports on whether a card has
been approved or declined. Real-time authorization can be more expensive than
batch processing.
5.
Choose settlement
software.
This software is used to settle credit card
transactions from your PC. It is the equivalent of a card swipe terminal,
telling you whether a card is valid, and managing the transfer of funds between
the customer's card provider and your merchant account. When you choose this
software, look for a product that imports information directly from your order
entry system so you can avoid having to re-key data. Features that help you
track transaction trends and other sales information also can be useful.
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