Having an online store is a great way to make a profit and offer access to your business in all parts of the world. Any business owner is interested in attracting as many clients as possible and keeping them satisfied. But is accepting credit cards online actually important or can you run a store with online payment services only?

Do You Have To Accept Credit Cards?

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It is true that in the past few years, more and more people have started using online payment services and implementing such a paying procedure into your website is quite easy. However, it is also true that a large percentage of those who are using these payment processors are only doing so because they have no other option. Credit cards are easy to use and people are not ready to give them up just yet. If someone is interested in one of your products, he will try to get it, but you should also try your best to make his job easier. You shouldn’t force your customers to create other accounts, when they can easily make the payments through their personal debit or credit cards.

The Importance of Accepting Credit Cards

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Maximizing sales should be your priority when running an online business. There is no reason not to accept credit cards if you want your visitors to become customers. Accepting payments through credit card is also a way to make people comfortable with your website in terms of safety. Many internet users are still afraid of using other types of payment besides credit card and if your website has no problem against this method, your visitors will certainly be happier.

How To Accept Credit Cards For Your Online Business

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The only thing you need to do is set up a merchant account. The process is not as complicated as it seems and you can even hire a company to do this for you. After that, your customers will be able to buy anything from your website with their credit card and you won’t have to worry about the transactions. Everything will happen automatically and the money you earn will end up in your bank account.

A few minor changes to your website are necessary, but any web designer can do this for you. Luckily, you won’t have to wait long since such a procedure usually takes only a few days complete and it won’t affect your website whatsoever.

Conclusion

In the end, there is no reason not to think about opening a merchant account and accepting credit cards on your online store. If your website is running without this payment option, you might be losing dozens or even hundreds of clients daily. The process is not complicated, it is completely safe and your customers will appreciate the change. This is exactly why you should start learning more about accepting credit card payments online and you should make the decision as soon as you can.

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Online businesses make use of the payment gateway systems in order to implement the shopping cart function on their website, so that they can accept both debit and credit cards from customers. There are a lot of advantages for the merchant with such an account, but you need to be careful when choosing your provider and when setting up the different functions with your account.

Possible drawbacks an online business might encounter with the setup of a merchant account

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One of the most often met disadvantage, merchants agree to it as well, is when there business is being categorized as a high risk business. What does this mean? Simply, that their business sells products and/ or services that are high risk. For instance, if you sell tourism packages online, this is quite a shaky field, as people tend to ask for refunds or chargeback due to the fact that hey want to cancel their trip for one reason or another. This means, that for such a chargeback you as a merchant are going to be penalized (and the costs incurred by high risk merchant accounts are quite expensive).

Or, if you sell high blood pressure regulating medication containing natural extracts (not scientifically approved medication, but what we call OTC – over the counter drugs), you will be again categorized in the high risk business category. Therefore, one of the major drawbacks might be the costs incurred with chargebacks and refund requests.

Then, if you are a fresh business starting just now on the online market, you may not qualify for a merchant account right away. It is just like when you are trying to get a loan without a credit history (quite impossible!). Therefore, as a first step you will need to partner with an Independent Sales Organization (called ISO), who will act as an intermediary between you, your customers and the bank, thus facilitating the sales process. However, nothing is for free in this life, so they most often operate on a commission basis. Until your business starts rolling, and you can make proof of a positive sales history, you need to stick with the ISO as an intermediary.

Advantages outweigh by far the disadvantages

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• A few years back you as a merchant had to apply for a different merchant account if you accepted VISA credit cards, and a different one for MasterCard. Now, these merchant accounts usually facilitate transactions from all major credit card brands. No separate fees and charges, just one single type of fee regardless of the type of the card
• Merchant accounts open the window on the world for your business. Just imagine what it means to your business if you would accept international customers. Higher traffic to your presentation webpage, means a greater number of potential customers for you => unprecedented profits.
• Merchant accounts offer a simplified overall transactions process for the merchant. He will receive very detailed statements, so that he can keep track of his business transactions very efficiently
• They can save both precious time and money.

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Knowledge is power, and power can generate more profits. This is the way you should think whether you are an e-commerce entrepreneur or if you own a company that has an online presence as well. E-commerce is trendy, and rewarding, but if you do not keep up with the system requirements and if you don’t learn about industry news and the cutting-edge key phrases, you are losing the competition. Did you know that US online credit card purchases for last year summed up to $50 million +? This means that the online shopping trend is in a continuous expansion, and if you stay well informed and updated your company will see a greater profit in the sales section.

Business to business or business to customer?

B2B (business to business) is a platform that facilitates business transactions among two or more companies. If you facilitate the implementation of merchant accounts for online e-commerce sites, you are into the B2B field.

B2C – (business to consumer), is when your e-commerce company is selling goods and/or services to individuals. For instance, if you sell household electronics online, you belong to the B2C category.

Etail & Turnkeys – What are these?

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Etail is simply internet retail. If you are into the B2C business, you are most probably an Etail provider. Quite important to know this key phrase, especially if you need to make a formal application for a business loan for instance, and then you have to specify that you run an “etail business”.

The turnkey is a phrase used to denote a package that consists of readily constructed webpages or website content that you can already use. Webmasters for example, find these turnkey packages very useful. Here are a few examples:

• Turnkey websites packages – adsense ready websites, digital download shop, webpage clone scripts and many more
• Turnkey content – ready PLR article packages, huge databases (airports, real estate, etc.)

As an e-commerce entrepreneur the turnkey customized packages can help you a great deal with your web marketing campaign (i.e. buying PLR articles to promote your products/services by submitting to article directories with links inserted).

Merchant account and chargebacks – two definitions you truly need to learn

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The merchant accounts are truly indispensable if you want to make profits online. You will be provided with a payment gateway, a tab will be installed on your presentation website (i.e. shopping cart icon, or “buy now” message), and you can accept credit card payments from customers.

So far so good, but if your business sells not quite that original and quality items, clients will request chargebacks (they will ask for their money back). Given the fact that authorization already happened by the time they ask for this refund, the bank is going to penalize you, with even $25 to $30 per chargeback. The more such unpleasant situations you encounter, the more you will need to pay.

This is why it is very important to provide your customers with fresh updates, realistic product descriptions and a top notch customer service.

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A merchant account is indispensable if you are running an online business. With the help of this account you will be able to collect the payments from your customers, who use their credit cards when shopping. However, if your business is classified as one belonging to the high risk category, you also need to apply for a high risk merchant account. This is a more expensive option, but since your businesses is more exposed to chargebacks than a business selling only books for example, the risk involved is much higher.

What businesses belong to the high risk category?

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Well, mostly pharmaceutical companies/retailers (especially OTC vendors), companies offering traveling packages (many customers opt out last minute for example and then you are obliged to offer refund), telemarketing related companies (you may end up with a lot of unsatisfied with their products customers, etc.), online accounts that operate on a membership basis (dating for example) or online gaming portals (online casinos).

The independent sales organization (or, ISO) is the one that will determine if your business is high risk or not, highly taking into account the estimates for chargeback and refunds. If your business sells diet pills mainly, which are considered Over the Counter medications, the risk of clients asking for chargebacks is quite high. Many customers may find that the pills have not worked well with their system (they did not loose weight as specified on the website ad).

If the banks consider that your business does not abide by some standards, rules and regulations (such as proper marketing, delivery or sale of these), then there is a higher risk for the banks to process these transactions from clients.

Potential costs for you as a merchant that are incurred with high risk merchant accounts

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If the client is unsatisfied with the products/services that you delivered, he/she may ask for a chargeback. This is quite a complicated process involving the credit card issuing bank, you, the payment gateway and the customer of course. For such a chargeback case, you might end up paying even $30/chargeback.

You have to keep your chargebacks at a minimum, if you do not want to loose precious business money. You can do this best if you implement correct sales strategies, and honest product descriptions. A very well setup customer service is also of high importance, as keeping constant contact with your customers gives them trust, and you can avoid unnecessary refund requests or chargebacks this way.

What you will need in order to set up a high risk merchant account

• Settle whether you are going to open one with a bank directly or through an ISO
• You need to provide either with a very well drawn up business plan, which clearly shows the purpose of your business, what are you going to sell, how are you going to market your products/services and how you are going to sell them (presentation website, make use of affiliate marketing, etc.)
• Sales estimates and pricing fact sheets (how much will your product cost)

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VISA, MasterCard and Discovery credit cards are circulating the online market like foreign troops invading a country. If you run an online business, and you are selling products or certain services, you must enter the trend and accept credit card payments. People find it so much easier if they can get their hands on a favorite pair of boots on the instant, by using their credit card, and receiving the order the next day. The electronic payment system is:

• A trustworthy system both for you as a merchant and for the client
• An easy process
• A system that will bring you significantly higher profits, through impulse shopping. People come to your site to buy only a specific item, but then they will also notice that discounted digital camera you are offering. If the card has enough funds, they are going to buy it.

What you will need before you can implement the process

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• A Business checking account
• A Business license (issued by your government office)

You should carefully research the market and see which the best offers for business checking accounts are. These types of accounts are specifically tailored to meet your merchant needs. At BOA for example, you will find more types of such accounts available, you just need to choose what suits your needs best:

• Basic account – total security protection, bill pay options, mobile banking and other customizable offers
• Business plus (Advantage) – you can add between 1 and 3 additional checking/saving accounts, so that you can manage your finances even better and online payroll option.
• Business Analyzed Checking – if you want to receive detailed statements.

Settle for a merchant account provider

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Now that your business license and your business checking account are in order, you should comparison shop to find the most advantageous merchant account provider. Some of the most important factors you need to check are:

• Whether they charge you a monthly fee
• What is the per transaction cost ( usually between 0.15 EUR and 0.50 EUR maximum)
• Processing and high risk rates? (The high risk rate should not exceed 5%)
• Check whether all currencies are accepted, especially if your online business has an international profile.
• Make sure all major types of credit cards will be accepted

When you have found a preferred provider, you will contact them and ask about the main options. If you like what you have found there then it is time to set up your account. You will need to provide personal information along with business details and estimates + your business checking account. From there on, let professionals handle it. You just sign the contract, and you are ready to accept payments from your worldwide customers, hassle free and quick.

Next, a “buy now” or “add to shopping cart” type of logo is going to be inserted on your website, so that your customers can add the products/items to their e-shopping baskets and be able to pay using their credit cards.

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Having a website where you can promote your products or services is costly, especially if you do operate only a small business. A reputable SEO company will undertake the job and build a website that respects the latest trends in graphic design and functionality, but until you can afford these costs, a blog can also be the answer that will help you boost the profits. When your blog becomes strong enough to influence people’s opinions, so much that they contact you to ask about your products/services, then it is time to invest into a nicely built website. Your blog and your website can then operate in parallel, with the website being a place of presentation and a marketplace (with a merchant account setup so that you can accept credit cad payments); while your blog is going to be the place where you continue to post news, share ideas, market certain products, etc.

Avoid too many flashy ads/banners

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As a first step, you should not think about writing on your blog in order to monetize it. You should think of creating a nice environment that will help your business grow. Later on, depending on how successful you are, of course you can monetize it and accept ads, but stay away from flashy banners and half page ads written in CAPS. Even if you are offered more money, think of it that this could ruin your credibility and the overall aspect of your place.

• Keep your blog nice and clean
• With a user friendly layout
• With information rich content instead of wall of text fashioned articles

You are working to build something nice for yourself, and you should keep this in mind at all times; don’t let yourself trapped into cheap ad revenues just for the sake of $2/day.

Spread the word with the help of social media

Facebook and Twitter are two platforms that will help you attract even more people to your blog. Setup is free and easy and all you have to do is place fresh news/content/tweets regarding your business. People will be redirected to your blog through these portals, will learn about your interests/business, and will want to know more.

Time to do some real business: Website + Merchant Account = high profits

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When traffic to your blog is constant, and you can also see that people are interested in what you have to offer (through mail enquiries, Facebook comments, etc.) it is time to move on and build your website. This will require a higher investment and greater planning, but all your efforts will eventually pay off. Always work with professionals in the field, and double check that you get what you have paid for.

Make sure that you also contact a reputable company that can help you with setting up your merchant account. A payment gateway is very important to your business’ profile, as you will automatically gain trustworthiness if you are able to accept credit card payments. Even if it is an e-book that you wrote and want to sell it, the merchant account is the simplest and most clear payment system you should implement.

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Whether you are a small retailer who operates an online store, or you are a well established name on the market, the success of your business highly depends on some e-commerce strategy implementations. Online shopping has become a very convenient, and cost and time efficient venture for the Internet users. Everyday hundreds of merchants bring their business on the online stage, exactly because this way they can have a more profitable business with less capital invested. You, as an online merchant are facing a greater competition with each day. In order to keep up with that competition, you also must do your best to stay on the floating line, and eventually rise up.

Your presentation website – keep it simple and to the point

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No matter what kind of products or services you sell through your presentation website, remember that less is sometimes more. Stay away from decorating your site with flashy banners and lots of advertisements, and on top of these using all the colors of the rainbow. Instead of attracting customers, all you will manage to do is to distract them. People want to see a neat website, where every category is in its own place, and where they can find quickly what they are looking for.

Also, if you want to keep your visitors (and potential buyers!) for more than 2 minutes on your website, you should make sure to include:

• Realistic pictures of your products
• Nicely put together item descriptions
• Each item with a price tag – people don’t like not knowing what the actual price of an item is. So, displaying under a product that “it starts from $0.99…” will make 40% of your visitors go away.

Communicate with your visitors, returning clients and potential buyers

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The better built up your customer service is the faster and more efficient your business will roll. If you run a small business, you can add the chat option on your website. You do not need to be online all day, but you should make a program for yourself. For example, you can be online through any of the instant messaging software available from 4 to 6 pm every day. This practice is something that highly adds to trustworthiness. People will know that they can talk to an actual person every day at the same hour, so they can ask anything related to your business.

If you run a bigger business, and you have several online stores, than you should probably hire call center agents that will be available online for the needs of your clients.

• The contact us page – should always contain a phone number where clients can call you
• An email address should also be displayed

Loyal customers need special treatment. For them, you should build up loyalty programs offering discounts and incentives. This is the only way you will be able to keep your client for a long time.

Once you have tested the local market, and you can see that everything is running smoothly, you can think of bringing your business on the international market. That means more work for you, but it will also mean greater profits for your business.

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Refund requests and chargebacks are two features that online shoppers particularly love. They buy an item from your e-commerce site, using their credit card, but then when receive the order they discover that:

• The products is different from what they have seen in the item presentation picture
• It lacks certain features which were mentioned in the small text item description (for example, it stated that the remote controller comes with two AA batteries, while in reality it didn’t)
• They are not satisfied with how the product functions

There are hundreds of reasons that can make a customer unhappy with their purchase, and if they ask for a chargeback, this is going to cost the merchant extra money.

Strategies a merchant should implement in order to avoid chargebacks

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Setting up a perfectly running e-commerce business is not easy. You had to work hard on implementing the right marketing strategies, you needed to pay for the services of a reputable SEO company to handle your website optimization, plus in order to keep up with your competition, and you need to be innovative. It is not worth loosing everything you have managed to build; therefore, keep in mind the following:

• Product presentation photos – these must be as realistic as they can; you should avoid adding a different picture for the item you are actually selling. For example, you should not add the photo of an original Apple iPhone, if you in fact are selling low priced knock-offs.
• Product description- you should add every important detail in the text, but avoid adding specifications that in reality have no importance. Also, you should add annotations like “color may differ slightly from the picture”, if it is the case. Let the customer have no surprises of any kind when he/she receives the package
• Terms and conditions – this is where your credo as an online merchant will be described, and also where the return policy is described in detail.

If you pay attention to these three details, you will definitely be able to prevent chargebacks from your clients.

Top notch customer service may keep refund requests at bay

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The truth is customers like to be looked after, and feel important, and you can give them that through a very well setup online customer service.

• Quick responses to email (24 hours at most) will put you and your business in a very good light. Even if someone is only asking a question, it is important to give a prompt response. Not to speak of when a client wants to return the item, and contacts you through e-mail. You can settle so many disputes, if you show your clients that you are present and willing to help.
• “We are sorry for the inconvenience” – this is the magic phrase that should be repeated to unsatisfied customers through the phone. People are prone to change their minds very quickly, when they sense that they are treated respectfully. Remember this, and the number of chargebacks is going to get smaller with each day.

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Opening a merchant account is easy as 1 2 3. You, the merchant contract with a reputable provider, agree to the payment terms (fees, extra charges, rules and regulations stipulated within the contract, etc.) and you are ready to reap the benefits. Your little online business grows bigger and bigger by the day, because you have your business available to a wider audience. People like online shopping, because it is safe, it is comfortable and it is the quickest method of having that last generation plasma delivered right to their doorstep. All these can exist thanks to the online merchant system. But what’s going on behind the scenes? How does the pyramid work?

…because Plastic is Fantastic

Visa, MasterCard, American Express and Discovery are the ruling payment technology companies that make it possible for these cards to exist. Visa, the master ruler detained almost 40% of the credit card market share in 2009, and an exorbitantly 60% debit card share. It is followed by MasterCard with 30% +, American Express with a mere 10%+ and on the last place there is Discovery with less than 5% for both credit and debit cards. It is always important what logo your credit card is bearing, and as far as the merchant accounts are concerned, the payment systems love accepting high brand and secure credit cards bearing any of these logos (considered less risk options).

Banking institutions – the rule makers

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There are many people who actually mix up payment technology systems with banking institutions: Visa is a brand, while the banking institution is the regulating party. All the banks issue Visa or MasterCard logo bearing credit cards, but they all have different rules and regulations. One bank might issue a Visa credit card with a high credit limit and outrageously high late payment fees, while the other bank issues another VISA credit card but with a low credit limit and very advantageous interest rates. The brand of the card simply certifies that the cardholder will have high security transactions and that the card will be accepted anywhere in the world, while the banks are the sharks dominating the money & the rules.

Merchant account services – the intermediaries for a successful business

You, the customer, will go online and search for the desired item. You will check if the respective merchant does accept the payment option you are about to use. If you own a MasterCard, and this is specified on the main page of the merchant, it means that you can safely pay the item you want, and receive it soon, no hassles whatsoever.

You, the merchant, will find the services of a merchant provider very useful and highly advantageous:

• You will be able to accept a wide array of payment options (credit cards and debit cards issued by a great variety of banking institutions)
• In exchange for a monthly fee, you will receive your statement each month- so that you can keep track of your businesses’ money flow.
• You will soon be able to see a boost of your profits, because the traffic to your presentation webpage has increased thanks to the fact that you accept credit card payments.

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Owning an online business, through which you sell products/services nationally and/or internationally, makes the merchant account a must have. This means you can accept payments made via the credit/debit cards, and you don’t have to worry about anything else. The customer pays, you ship the order, and your business rolls fast and efficient. But in order to know that you contract with a reputable merchant accounts provider, you need to make sure that you understand the role of each fee you pay.

Additionally, you must pay attention to the following:

• Carefully read the fine print and make sure you understand all the specifications there
• Make sure the provider offers you top notch customer service – so that you can contact a team member whenever you need information
• A reputable e-commerce and online payment services provider will also offer you fraud protection (i.e. SSL secured server for your transactions)
• You are able to accept all payment methods (e-wallet, debit cards, credit cards, etc.)

Discount rates, surcharges, hidden fees and more…

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When you search for the perfect merchant account provider, make sure that the company provides you with a very clear description of the fees they charge. When something is not clear, and if you ask and receive no prompt answer, it most likely means that you are paying hidden fees that are unjustifiable.

Knowing what you pay for will always help you keep track of your entire business, and will also allow you to foresee the profits/losses, etc., according to the sales number and traffic to your website.

Fees you can expect to pay with a merchant account

Transaction Fees – this a unique fee charged ever time a transaction occurs. It does not matter whether the transaction is authorized or declined, the fee will be charged. Transactions fees vary depending on whether they are swiped, keyed or wireless (usually more expensive than the other two options)

Address Verification Fee – called AVS, allows you, the merchant to lookup the address of the card holder, thus the service helps you stay away from fraud. The merchant pays somewhere around 5 to 7 cents for this service.

Batch Fee- you are going to be charged this fee, whenever you settle your transactions (forward the money to your account). It will cost you $0.50 the most.

Discount Rates – depending on the percentage you are charged by your provider, this is a fee you will pay after each transaction. If the discount rate is set at 1%, and someone makes an order of $50 in value, you are going to pay a $0.50 discount rate for that transaction.

Account setup fee- is a one-time payable fee, when you open your account with the provider (some selected providers may not even charge you this fee at all).

Early Termination Fee – this is charged by the provider in case you wish to step out of the contract terms sooner than agreed within it. It is similar to an early redemption charged on a typical personal loan (risk management fee for the provider)

These would be the most important fees charged by a merchant account provider, and some extra fees include: the annual fee, customer service fee, monthly minimum fee, or statement fee. All the merchant account fees differ from one provider to the other.

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