Are you planning to create a website to sell products? If this is the case, then you are also probably deciding on whether or not to accept payments via credit cards. If you choose to offer this particular form of payment method on your site, how will you do it? Let us first take a look first at the reasons why it is a good idea in the first place.
Reasons to Accept Credit Card Payments on Your Site
One of the best reasons why your website should accept credit card payments is to be able take advantage of impulse buyers. These buyers, after having clicked your ads, would be excited to purchase the products you are offering. If they have a way to place orders right away, and if you are offering them a way to do it, then you are already able to secure that sale.
Allowing your buyers to complete orders from your website through the use of their credit cards will help them experience a higher level of convenience, especially if they live overseas. Credit card payments automatically resolve concerns when it comes to differences in currencies. If the only payment method you make use of checks, you are sure to lose a great number of clients, not just the ones overseas.
How to Accept Credit Cards
There are basically four components that you need to understand. These include:
• Merchant Account
• Payment Gateway
• Payment Processor
Overview on Merchant Accounts
Merchant accounts are actually a form of bank account. These allow account holders to accept payments made by customers through credit cards or debit cards. Since you would be setting up this payment method on your website, it is highly unlikely that you would have to get a merchant account under your name. What you are most likely going to do is to enter into an agreement with a payment processor who has a merchant account.
In this case, the payment processor will designate a merchant ID for you, which will serve as a form of identification that you are a merchant. However, you are not the actual owner of the merchant bank account. This designation, for all intents and purposes, will still serve as your own merchant account though. You would still need to get a business checking account, as this is where the funds will be deposited to.
Overview on Payment Gateways
Payment gateway is a type of service that your site will make use of to initiate transactions and retrieve feedbacks such as decline or approval of payments. In other words, it is much like a virtual equivalent of physical credit card terminals or point of sale. These often provide virtual terminals so that ad hoc credit card transactions can be run just like with credit card swipers.
It is also the one responsible for giving settlement reports, voiding transactions, and initiating refunds. It handles every piece of sensitive information safely and securely. In addition, it also performs a number of anti-fraud measures including geolocation checks and address verifications. It is through the payment gateway that you will be able to indirectly communicate with your chosen payment processor.
In the event that the payment processor has determined that a transaction is declined or approved, authorization will be passed back to the gateway, which in turn, will initiate a response to the e-commerce system your website is making use of.
Overview on Payment Processors
The payment processor is different from the payment gateway. The former is the service responsible for communicating with the banks and companies that issued the credit cards being used for payment. Every time that a transaction has been forwarded to the processor, it will forward the request to the credit card company or the bank. If the customer used Discover or AMEX, the processor will forward the request directly to these financial institutions.
The credit card company or the bank that has issued the card will be the one to perform checks for credit, debit, and fraud. After this, the company or bank will respond to the payment processor either with a declined or an approved status. The processor will then forward this response to the payment gateway, which will then relay the information to the e-commerce system your site is using.
Overview on E-Commerce
The e-commerce system will be responsible for interacting with your chosen payment gateway. This can be in the form of a shopping cart or an order form. One thing to keep in mind before choosing a payment gateway is to make certain that it is compatible with the e-commerce system you would like to use.
Popular and Commonly Used Payment Gateways
There are several third-party companies that you can use as the payment gateway of your website. These gateways make it safer and more secure for you and your clients to transact as well as make and receive payments online via credit cards. Some of the most popular gateways include:
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