Accept Credit Cards

How much does a Merchant Account cost?
Because a Merchant Account is based largely on trust, the cost of your merchant account varies with the risk that the merchant bank feels like they are assuming with you. Because of higher incidence of fraud, higher fees are charged for internet, mail, or phone orders than for face to face transactions. Higher fees are also charged for higher transaction amounts, because the larger the order, the more money is at risk to be lost if fraud occurs. Also, depending on the merchant account, there are a number of fees that are required, including:

Setup Fee - This fee is a one time cost. With the majority of providers this fee starts at $195 and up. Almost all merchant accounts charge this fee, however many integrated solutions allow you to avoid the setup fee.
Discount Rate - This fee is usually a percentage of the transaction amount. Real-time processing rate starts around 2%, and average around 2.35%. The discount rate is always taken off the top along with the transaction fees before any money is deposited into your account.
Transaction Fee - Whenever you process and charge a customer's credit card, there is a transaction fee involved. This is to pay for the network and computers required to make the transaction happen. Most providers charge anywhere from 20 to 50 cents per transaction, and is common to almost all merchant accounts.
Statement Fee - Depending on how you are setup, your bank and/or your payment processor will send you a monthly statement, detailing all the transactions and deposits that have been made into your account during that particular month. This fee varies, but usually ranges about $10.00 a month.
Gateway Fee - This fee pays for the privilage of being able to process credit cards in real-time. Your payment processor may charge a monthly gateway fee which generally ranges from $10 - $30 a month.
Monthly Minimum Fee - The majority of Merchant Providers have a monthly minimum. This is a fee they impose if your credit card charges don't add up to a stated monthly minimum. For example, your monthly minimum is $25 a month. If you only sold $100 worth or products for that particular month, then it would cost you say 2.35% for the credit, 30 cent transaction which equals to $2.65. Now, that is $25 - $2.65 = $22.35, so you would be charged $22.35 for that particular month. back to top

What are the ways I can get my customers' credit card information?
Well, you already know about the traditional ways--by phone, by mail, or in person. On the internet, there are several more ways to accept credit card information. You can simply create an HTML form that asks them for their information, or you might use a Shopping Cart (advanced software that walks the customer through the purchase process and calculates the total price) to gather the information. In either case, this can be done securely or insecurely, but we HIGHLY recommend sending credit card information securely. This involves getting a digital certificate and setting up a secure server (see below).

Many companies use a customized html based order form. This type of ordering system usually uses some kind of CGI script to send the orders to you via email. You can also add html coding to your order forms to work with your real-time merchant processor, so your orders are all done automatically while sending you a confirmation order via email. This type of ordering system is best for businesses with services or a few products to sell. Companies with a large product line are suggested to use a shopping cart system for easy ordering.

If your business needs a sophisticated order form that requires much data, then you may possibly need an order form that is run by a script of some sort. Such as a CGI script that is customized to your web site and your needs. This would require a programmer, and you should be able to setup your script to work with your real-time merchant account if you chose that route. back to top

Do I need "Shopping Cart" Software? Where can I get it?
If your company has a large product inventory, then you will require a Shopping Cart ordering system. What this will allow your customers to do is shop throughout your web site, add products they like and check out when they want to. Very similar to a retail store such as Wal-Mart. Most Shopping Carts use "Cookies" that are hidden files within the customer's browser that will store their data, so if they want to return two weeks later for example, they will be able to checkout at that time.

There are hundreds of Shopping Cart systems available, and each one has their own features and capabilities. The ideal features to look for in a Shopping Cart, are to find the one that is the most customizable. This will allow you to make your customer's shopping experience completely consistent throughout your web site, keeping it professional. Some carts do offer a database feature which makes it much easier for companies that have a tremendous large amount of inventory, to update and build their web site using the Shopping Cart. We recommend that you check with your web hosting provider to see if there is a shopping cart included with your service. back to top

Do I need a digital certificate? Where can I get one?
Since you are going to be taking personal information from your customers via the world wide web, you need to make sure their information is completely safe. To be able to do this, you need SSL (Secure Socket Layer). SSL is a secure web protocol that uses 128 bit or higher encryption technology to keep your customer's information completely safe through the entire ordering process. To not have any potential of losing sales, using SSL with your ordering systems is highly recommended. Most ordering systems will work with SSL. There are several ways you can use SSL with your ordering system, they are as followed:

You have the option to purchase your own SSL certificate from any SSL authorized seller. You can purchase your own certificate starting around a hundred bucks. Your possible url to your secure web site could be one of the following:

- https://www.yourdomain.com
- https://secure.yourdomain.com

I would check with your web hosting provider to see if they charge a setup fee for them to enable your SSL certificate onto your account. Your other option is to use the SSL feature with your service from your web hosting provider, if it is included. Even if they charge extra fees for this service it might be worth looking into. Either method is good, as long as your ordering systems are secure, so your customer's information isn't vulnerable. back to top

How do I process a credit card?
The most popular method of accepting credit cards for businesses on the web is real-time processing. This type of service will process and charge your customer's credit card information automatically by working with the ordering system you have chosen (Shopping Cart, Order Forms, etc.). Since the whole process is automatic, this is the most effortless method available.

You will need to get setup with a gateway processor such as Authorize.net or other gateway processing system. This is what does the actually processing and checking the availability of the funds on the credit card that is submitted. Some merchant accounts have their own gateway processing system, but the majority of the merchant providers available are resellers for gateway processors such as Authorize.net and many others. Most gateway processing systems allow you to use your own ordering system along with a virtual terminal that is included within their system. This will allow you have your orders processed automatically on your web site, but you are still able to process them manually through the virtual terminal, for orders that come in over the phone.

There are some merchant providers that are actually owned by a bank, which they have their own gateway system. Meaning you will only have to go through one company for all of your needs. Card Service International is an example of a company that is setup this way, but you will most likely not see much of a difference either way you go.

Pricing for such service can cost anywhere from a couple hundred dollars and up. This fee is almost impossible to avoid, but there are many companies that sell this service at a very competitive rate. Most Merchant Providers offer a leasing option where you pay a fixed amount each month, for so many years. For example, if a company sold the real-time service at $195 up front, then they might sell it on a 36 month lease at $19.95 per month. On this type of lease, it would cost you over $700 by the time you had it paid off. To save money, it is best to pay it off upfront, and not go with the leasing option. back to top

What's a credit card terminal?
A terminal is a machine that allows you to swipe the credit cards through it, or manually enter the credit card number through the keypad. It is very easy to operate, and not very much effort is required on your part. This method is recommend for companies that have the actual credit cards presented in person by the shopper.

As an example, the machines at stores such as Wal-Mart, are called terminals. You can purchase a terminal on the web for around a couple hundred dollars. It depends what kind of options and features you require. Most Merchant Providers sell terminal machines. back to top

What is a payment gateway?
When a merchant makes a sale and swipes a customer's credit card, the card number, the amount and the merchant ID travel over the credit card processor's computer network. The credit card processor can either be a bank or a company that does nothing but provide credit card processing services.

From the processor's network the transaction goes to a credit card computer network. If the customer is using Visa, for example, the transaction will go to Visa's network. In turn, the electronic transaction goes to the bank that actually issued the card. The bank then checks the account and verifies the customer has adequate credit to cover the purchase. The bank then sends the merchant an authorization over the network. Now the sale is complete, but the transaction is not -- no money has changed hands yet.

At the end of the business day, the merchant sends that day's charges, in a batch, to the credit card network for processing. The transactions travel via the merchant's credit card processor. Individual transactions are then stripped out and sent back to the individual cardholders' banks. Banks then debit cardholders' accounts and make appropriate payments to the merchant's credit card processor through the Federal Reserve Bank's Automated Clearing House.

The credit card processor then credits the merchant's bank account for the transaction amount, minus its fees for the transaction. Those fees also go toward paying transaction fees to the issuing bank and the credit card network. Despite the use of computers, it can take two business days before the merchant's account is credited. back to top