A Quick Guide to Setting Up Online Payment Processing
In today’s market, it’s clear more than ever that businesses need to be able to connect with customers and clients online. Whether you’re a service or product company, offering online sales provides convenience for customers and makes it easier to do business with them.
Aside from your website set up, you need a way to start collecting payments. You will need to partner with a processor who will manage the transfer of funds. While are eager to get going, there are a few things to consider before you choose the best option for your business.
For online payments, when a customer submits their payment information, the credit card number and transaction amount are encrypted by a payment gateway and sent to the customer’s credit card issuer for approval. Once approved, the funds are sent to your merchant bank, which in turn sends it to your merchant account.
What do I need to get started?
Aside from your website, you will need to set up a shopping cart, which may already be incorporated with your site. If not, you will need to put one in place. You will also need to incorporate a payment platform such as Stripe or PayPal, or obtain a direct merchant account, which will allow you to transfer the funds from your customer’s accounts into your business checking account.
What do I need for my customers?
A simple process. If it’s difficult to pay for something, customers are more likely to leave your site and go somewhere else.
A quick process. People don’t have much time and they don’t want to spend it waiting to hand over their money.
A safe set up. The only thing you want your customers to think about is your product or service and not whether they are putting their information at risk.
How much will it cost?
Your costs will depend on several factors including the number of transactions, the value of our sales, your credit rating, and your processing option. Generally, you will pay a small transaction fee along with a percentage of the sale. You may also encounter other set up and monthly fees.
What are my options?
There are two primary options when setting up your online payment processing. You can go with a Payment Platform, such as Stripe or PayPal, or you can utilize a Direct Merchant Account.
Although these two options may provide many of the same capabilities, there are many key differences.
How soon will I get my money?
While the transaction will go quickly for your customer, it may take a few days before the money is deposited into your account. This depends on the solution you choose, as funding times differ between banks based on your business type and business model.
How do I get set up?
After evaluating your options, choose a solution and start the application process. This can usually be initiated online. If you are applying for a direct merchant account, you will be asked to provide some basic business information as well as processing volume estimates. Additional information may be required, based on your business type and business model.
What can a processing partner do for me?
A good processing partner will walk you through the process and connect you with the right banking option for your specific business. Finding the right solution is important, as some banks are a better fit for companies in certain industries or for certain billing models. A good processing partner will have multiple banking options to meet your individual needs.
What do I need to know about fraud and scams?
Online sales are riskier than in-person transactions because it is easier to use a stolen credit card number online than in person. An estimated 27 percent of online sales are fraudulent, according to the American Express Digital Payments Survey. With numbers like that, you will likely be hit by fraudsters and you will likely be on the hook. Having a good fraud detection and protection plan in place such as Pinpoint Payment’s 3D Secure, can allow you to shift that liability back onto the Banks, rather than you as a business.
What are chargebacks and why should I be concerned?
A chargeback happens when a customer appeals to a credit card company to stop or refund payment, due to a variety of different reasons. This was initially intended to protect consumers, however, over the last several years, cardholders have abused this process causing millions of dollars in losses and wreaking havoc on businesses. In most cases, the business owner doesn’t find out about the chargeback until the credit card company has taken the money out of their account. Furthermore, if you get too many chargebacks, your account could be placed on hold or even worse be abruptly shut down.
Fortunately, there are several measures you can take to reduce the likelihood of having chargebacks and protect your business such as working with a reliable payment processing solution and focusing on customer satisfaction.
If you have questions or need help, Let’s Talk!