action online

If you are just starting an online business and does not know how to process payments online, it is really not that difficult. Although my main topic is payment processing which is mainly dealing with a merchant account and payment gateway, let me talk to you about the whole selling process first.

What a website needs to sell products/services online and collect payments

1. An Order Form or a Shopping Cart.
2. A Payment Gateway
3. A Merchant Account

The Ordering Process

An order form is usually used for businesses just selling a few products or a single product. If there are a few products on the order form, a simple checklist can be placed like on the website of Charlie’s Pritchon. Although they do not accept payments online, their form is an example of just a simple list, and they added in a quantity box where buyers can enter their desired quantity to order.

A shopping cart is a system where you can browse various products in a categorized manner, arranged in certain orders where you see a preview of the items with short descriptions, thumbnail pictures, and has the option to view more detailes on any chosen specific product that will then show a full description and bigger picture. A shopping cart has a virtual container, where you add, change quantities, or remove items you wish to buy with a running total of all items. When ready to pay, the buyer simply does a checkout an will forward to the payment process.

There are many shopping carts out there, some expensive, some cheap. Custom shopping carts are usually more expensive and I know many people that may charge $5,000 to $10,000 for a site to be done with a custom shopping cart. Although a custom shopping cart may not always be the best solution. Other options are using carts like osCommerce and ZenCart. osCommerce and Zen Cart are both free, but these are not easy to install on a web hosting account for the average user. They would be even hard to integrate into an existing web design for the average user. But you can have them done and that might be the best way to get your site online right away and start selling. In my company, we charge about something in the range of $3,000 to $5,000 for making a shopping cart website. If you already have an existing website and just want to add a shopping cart feature and you are not that meticulous with the design and the template cart, my company can even charge $1,500 to integrate a shopping cart in to your existing website. If you would like someone to work on your shopping cart website, feel free to contact us, just visit www.ydswebsolution.com.

The Payment Process

Once an order goes for checkout, and the buyer is ready to pay for the items purchased, this should go through a Payment Gateway and Merchant Account. The Payment Gateway is basically the service responsible for securely getting the credit card or debit card information and passing it on to the proper authentication channels and sending this information to the Merchant Account. The Merchant Account is a payment accepting account of the seller where this facility is offered usually by banks and checks the authenticity and validity of the payment and moves the credit to the sellers’ bank account.

But today, as the Internet has continuously evolved, the payment gateway companies, are also the merchant account companies. Thus the Payment Gateway and Merchant Account are already one entity and are synonymous already. I am going to talk about 3 payment processing companies that I personally like and use myself, and what are the advantages of each.

Paypal

One of the best ways to start out is with Paypal. Why? Because it is free, if you use it for personal selling. You are just charged about 4.01% per transaction paid to you which is cheap compared to other online payment processors that have no monthly fees. Any online payment can be traced and it is your responsibility to report your own taxes. For this reason, some people have businesses in the form of LLCs or Corporations for tax benefits. And if you need to sign up on Paypal for the business Paypal service, they will even have a better per trasaction fee but will now include a $20 monthly fee.

For me this is the best way to start out. But you should not stop here. Some people do not buy things that often online. And since every customer of Paypal needs their own login and password and must join Paypal, sometimes a new buyer gets turned off by the idea of joining on the sign up process of Paypal, since these types of buyers do not buy things often online, all they want to do is pay. Having Paypal will target the often online buyer since they are probably a member of paypal already, so having it is still good and you can start out for free. But as your sales increases, or has more money to use to invest in another system, start considering adding a payment processor that does not need to sign up into an account.

Is your business is outside the United States, check with Paypal if their service is available for that country since Paypal is like a link to your bank account, the bank must support the Paypal system. If your business is in a country that supports Paypal, but your target market is in another country that does not support it, your buyers will also not be able to sign up. If the sellers country or the target market country does not offer Paypal, I suggest do not use Paypal, but if you have a way to have a bank account in the United States, still have Paypal for potential buyers from the United States.

For more information on Paypal, click here.

2Checkout

2Checkout can handle credit card payments without requiring the buyer to sign into an account. It accepts nearly everykind of credit card like Visa, Mastercard, American Express, Diners, JCB and Discover. It is more flexible in having clients buyers outside the United States, and is actually also better for the seller if the business is outside the United States. My business started in the Philippines and Paypal is not available there. Paypal has a direct link to a bank account that transferring funds anytime is quite faster than other payment processors, but not all countries have a standard banking protocol like the routing number banks use in the United States. 2Checkout seems to be able to send funds to any bank account worldwide but you may get deducted with from Electronic Fund Transfer (eFT) fees that vary from one bank to another.

Another strenght of 2Checkout is there are no monthly fees. The per transaction charge may be higher than others, but if you are just starting an online business, sometimes you may have some zero sales days while you are still promoting your own business. 2Checkout might be the most economical solution where when there are no sales, there are no charges. If you have sold items using 2Checkout, 2Checkout deducts 5.5% and $0.45 for every transaction. And to sign up it is a one-time sign up fee of only $49. If you just plan to sell something online but does not have a website yet, you can already sign up with them. Since you have no monthly fees anyway, and if you sign up early, you can study their system well so you can integrate it with our own website. So it is actually advantageous signing up early since there are no monthly fees for no sales. Some things not mentioned right away in their website, but can be found in their FAQs and other pages is payments are deposited to your account every 1st and 16th of the month. But if you have a large volume of sales, you start receiving payments weekly transferred to your bank account. Another thing is some percent is held, like about 10% to 15% and is given to you at a later time, something like 4 to 6 months. I haven’t read their policies for some time and I am just basing all of these with my current account with them. If you need to verify any payment, you can easily view all previous payments and all the details that go with in when you login to your own 2Checkout.

More information on 2Checkout can be found here.

Charge.com

When your business grows, and your sales increases, there comes a point when paying a fix monthly price and a smaller fee per transaction would be better. But if you are not selling that much yet, Paypal and 2Checkout would be better since you will not be paying monthly fees, only per transaction fees.

At Charge.com, per transaction fees are 2.38% + $0.25, very near a half-the-price value of 2Checkout. But you also pay monthly $39.95. But once you have Charge.com, you can also accept phone, mail and face-to-face payments aside from online payments.

Charge.com may not be a wise decision to take if you are running a small business and is just starting out with a minimal capital. But it is definitely something to look into once your business starts growing.

More information about them here.

Is SSL needed?

SSL or Secure Sockets Layer is an encryption protocol that makes information sent over the Internet in a secure, encypted manner to avoid possible hacking by sniffing so the credit card information is protected. To have a secure sockets layer, a digital certificate is needed. All of this cost some amounf of money, but this is not really needed on your own hosting account. Because when using Paypal, 2Checkout or Charge.com, your site forwards to them and you use their site to process payments. The only information that you will receive is the orders but the payment information go straight to the bank through these payment gateway companies using their SSL. When the payment is approved, the information you will get is if the payment was approved or not. But you do not receive the payment information itself, like the credit card number and other details.

SSL is definitely needed, but not needed on your own hosting account since the payment processors can handle that part for you. Unless you want to secure very well some other information that is passed on to you directly, that is the only time you might want to get a digital certificate to be able to use SSL.

To sum it up…

• Paypal

  - It’s free for individuals
  - Low per transaction fees
  - Not accepted in all countries
  - Requires account sign up
  - About 4.01% per transaction

• 2Checkout

  - No monthly fees
  - Low per transaction fees compared to other payment processor with no monthly payments
  - Accepted almost anywhere
  - Does not require account sign up
  - $45 one-time payment
  - 5.5% + $0.45 per transaction
  - No monthly fee

• Charge.com

  - A low monthly fee
  - Low per transaction fee
  - Can handle mail, phone and face-to-face payments also
  - 2.39% + $0.25 per transaction
  - $39.95 monthly
  - No sign up fee.