Accepting Credit Cards Online

Accepting credit cards online? In today’s crowded online market, it’s virtually a requirement to be able to take credit card payments. Nobody wants to wait for a check to clear—online is all about instant gratification. Consumers want to make their purchase, pay for it, and have it shipped, all the same day.

Accepting credit cards online - Do you need a merchant account

There’s no denying that you need to be able to take payments electronically to be successful with your online business. The traditional method is to obtain a merchant account and process payments directly, but if you’re a small business with low volume, the initial cost may be burdensome. It is possible to handle it without getting a merchant account, by using services of another system, such as PayPal, Moneybookers, or Google Checkout.

The advantage of one of those services is that your customers can pay with their credit card, but you don’t have to have a merchant account. Any one of those three options let you start taking payments online immediately. However, once your volume ramps up, it may work out to be much cheaper to use your own merchant account.

Accepting credit cards online - What is needed

Outside of the Paypal/Moneybookers/Google Checkout option, the only other alternative is to have a merchant account. This means you must apply with a merchant account services company for their services, which may include a point-of-sale machine for swiping credit cards, as well as software for online credit card processing.

It’s not necessary to have excellent credit to get a merchant account, but it does help. High-risk merchant accounts are available, but you may pay a higher premium for the privilege. If you’re a startup, have poor credit, or are engaged in what the merchant account services company defines as a “high risk” business, you will be charged more.

If you’re accepting credit cards at the point of sale, you will need a physical processing terminal for swiping the cards, and ideally, a dedicated phone line. The terminal can be purchased or leased.

Fees associated with accepting credit cards online

There are several fees involved, starting with the purchase or lease of your point-of-sale processing terminal. Of course, if you are operating strictly online, you won’t need this equipment. Most merchant account providers will have a start-up fee, which covers the initial set-up and the software.

In addition, there will be a per-transaction fee, which is usually expressed as a percentage of the transaction. This per-transaction fee can vary a great deal between providers, and may also be affected by your credit rating and the nature of your business, as well as the total dollar volume on a monthly basis.

Compare prices carefully, because they are not standardized by any means. There may be other fees that are not immediately apparent, such as a monthly maintenance fee in addition to the per-transaction fee, or any number of other miscellaneous charges.

One thing to watch for is the balance between start-up fees and per-transaction fees. Some merchant account providers will charge a higher per-transaction fee, but may offer free set-up. If you’re just testing the waters of online commerce, this may be a better option until your business is on solid ground.