The process of credit card enablement for your brick-and-mortar business was explained in the last column. Accepting credit cards, I explained, can assist improve income and speed up cash flow, according to research. We'll look at how to set up an online payment system for your business website this week. If you believe most bankers are stumped when it comes to connecting a physical location to a credit card system, ask them how to accomplish it on your website.
Most banks can supply you with the merchant account you'll need to accept credit card payments online, but they're not involved in the rest of the procedure. Even larger banks may only have a single "credit card processing expert" on staff, and if that person ever goes on vacation, you're pretty much out of luck (voice of experience talking here, folks).
I've assisted a number of clients in setting up online credit card processing systems, and I've had to sit down with the bank that issued the merchant account on several occasions to educate them on how online payment systems work.
Do you have any doubts?
"When someone pays online, how do they swipe the credit card in their computer?" said the manager in charge of processing Internet merchant account applications at a local bank (here's the Bible, here's my hand).
To accept credit cards on your website, you'll need the following:
(1) a shopping cart system; (2) a payment gateway service; (3) a credit card processor; and (4) an internet merchant account issued by a bank, other financial institution, or service bureau.
The following is a diagram of how online credit card processing works. (1) Your customer enters his credit card details on your website during the checkout process. (2) The transaction is sent to the gateway by the shopping cart software. (3) The information is routed to the processor through the gateway. (4) The processor contacts the customer's credit card's issuing bank. (5) The transaction is approved or declined by the issuing bank. (6) The processor sends the result to the gateway, which then sends it to the shopping cart system on the website. The entire procedure is completed electronically and takes only a few seconds.
The majority of these topics were discussed last week. For those who have forgotten the basics, here's a quick review, and then we'll speak about the shopping cart system you'll need to put on your website.
Payment Gateway Service: When a customer enters their credit card information into a webpage form, the payment gateway service is activated. Consider the gateway service to be the process's middleman. The website's shopping cart checkout system sends the credit card information to a gateway service, which then sends it to the processor for approval.
Credit Card Processor: A credit card processor is an electronic data center that processes credit card transactions received from the gateway firm, verifies the charge, and settles the payments in your merchant account.
Internet Merchant Account: An Internet merchant account is a bank or account where the processor deposits funds from online sales. Banks that are affiliated with major credit card providers such as Visa and MasterCard typically issue merchant accounts. Many banks will not open merchant accounts for Internet merchants because they are considered "high-risk operations." This policy varies widely, and in the end, the bank's decision to grant a merchant account will be based on economics.