Guide to Online Payment Solutions
March 13, 2009
Being able to collect payments from your customers is vital to your success – that’s simple enough to see. However, just how you go about doing that has become a bit more complicated in this new virtual world. No longer is money exchanging hands or being written onto a check. E-commerce merchants need to be able to accept credit card payments in order to serve their customers in this virtual environment. And here are some ways that you can do that:
For the smaller merchant that is either just starting out or doesn’t need to process many online payments, there are third party payment processors that they can use – usually for a nominal cost. Places like 2Checkout and PayPal are some of the more frequently used, but there are still others that are reputable. These payment processors work by allowing customers to submit their payment information to the processor itself, which then relays the payment onto you as the business. The non-disclosure of the customer’s financial information provides a safe place for the customer to give out their credit card number or check numbers. For a small fee, based on the transaction amount, merchants are able to accept payments without having to deal with a larger merchant account provider.
Other advantages to third party payment processors:
- Low in transactional fees
- No monthly services charges
- Built in security software
- No contracts
- Simple set up
- Can incorporate shopping cart features as well
However, once you are making more money in your business, you will want to consider what a merchant account provider can offer you. These larger payment processors will check the validity of the information that they are receiving, and then transfer the money (minus fees) to an established checking account or personal account. This kind of payment solution will not require your customers to sign up with the processor, but rather it will be a seamless feature on your business website that will take their credit card information in a secure manner.
Other advantages to merchant account providers:
- More security features to process payments and prevent fraudulent charges
- Lower costs for high volume merchants
- Can have direct access to funds more easily – some third party merchant account will freeze monies when a fraudulent charge occurs
The process of accepting online payments works something like this:
- Customer creates a shopping cart of items or services that they wish to buy.
- Customer goes to check out area to make final purchase, submitting their financial information to the website or to the third party payment processor.
- That information can either go directly to the payment gateway and merchant account provider, or it can go to a pre-check site like preCharge to authenticate the information and prevent chargebacks due to fraud.
- The information is then sent to the payment processor and the profit is transferred to an account for you.
- You receive notification of the payment and you ship the product.
What’s interesting is that while the online payment process seems like a long one, it happens in seconds. However, choosing the right processor for your customers might take a little longer.
Understanding E-commerce
March 5, 2009
E-commerce or electronic commerce is truly a revolution of technology. Though the wonders of the internet, businesses from around the world are able to sell, buy, market, and service their products and assist their customers with questions and concerns. In short, the virtual environment that the internet provides has become yet another playing field for commerce to take place upon. Are you ready for the games?
At first, the idea of e-commerce was limited to the idea of handling financial transactions in an electronic manner. That is, when you first were able to send orders for products from one place to another via EDI (Electronic Data Interchange) or money through EFT (Electronic Funds Transfer), this was considered ground-breaking. However, the real changes and innovations began when the world started to rely on credit cards in order to make financial decisions and purchases. The idea of the ATM to disperse money from your bank was something that created easily accessible funds that could then be spent just as quickly.
But paper money was not the final answer when it came to the beginnings of the internet. It just wasn’t a feasible method of currency exchange. If someone in Bangladesh wanted to buy something from Detroit, sending a check or wiring money was a long and often expensive process – enter in the idea of e-commerce. E-commerce began once businesses realized that they were limiting themselves with the idea of a physical store. By creating a virtual outlet for selling, they were opening up the possibility of profit to a larger scale. The internet was cheap and not too many people were online at first, making it a tool for creating a lack of competition and increasing one’s reputation.
Businesses can do so much with the internet these days in e-commerce:
• Provide goods and services to countries around the world
• Market their business at all times of the day, on all days
• Process payments and shipments instantly
• Provide customers with relevant information in order to increase the business’ repute
• Offer safe and secure payment processing with payment gateways and services like preCharge
• Create various websites for different world markets
• Create vivid online catalogs and shopping carts so that customers can shop from the comfort of their homes
And the real advantage to e-commerce is that once a website is in place and functional, it becomes an excellent, if not passive way to earn income. Businesses can be created and maintained with minimal effort and expense, while products can be sold and shipped without little action needed from you. With the use of a payment processor, businesses can accept all forms of payment, verify that payment, and get instant access to profits.
E-commerce is something that can not be denied or avoided. In fact, the more that you know about how you can make the internet work for you, the better for your business as well as for your financial goals. While the environment may be virtual, the truth is that customers buy more on the internet than they do in stores – why not take this knowledge and make it work for you?