Cash flow can make or break a company, especially in its early stages. That's why many online businesses often encourage credit card payments, although it's also helpful to give buyers alternative opportunities to pay with checks and money orders. Offering a variety of methods for shoppers to pay online increases the opportunity for these buyers to pay in the method they prefer.
Accepting payments online increases revenue and cash flow because money goes into the account immediately. Even more compelling is that there are more than 1.2 billion consumer credit cards worldwide. Credit card payments aren't returned for non-sufficient funds--and credit card holders tend to do more impulse buying than those who write personal checks.
Businesses have several options when setting up an e-commerce function and accepting payments online, which include:
- Process payments through a merchant account. To accept credit cards online, a small-business owner must first apply for a bank merchant account and then find a way to process transactions. At a brick-and-mortar store, the processing takes place when a card is swiped through the card reader. At an online store, the processing is done when a shopper types in the credit card information, which is then verified by a merchant account processor.
During most online checkout flows, a shopper is asked which method of payment is preferred. If the shopper selects a form of credit card payment, he or she will be redirected to a secure page within the store to enter the credit card information. After the shopper selects "submit," the credit card information will be sent to the correct merchant account, where it will be verified and either accepted or denied by the merchant account service provider.
Merchant accounts may have drawbacks for some small-business owners, however. Most charge set-up, monthly and per-transaction fees. Additional fees may also be involved if a business owner has a pre-existing account for a physical store, and wants to convert that account to accept payments online. Moreover, some banks won't approve small online businesses for merchant accounts, considering them high-risk operations.
It may take 30 days or more for a merchant account to be approved and the integration process can be burdensome for business owners to do it themselves. Fortunately, the growth of online sales has given rise to an entire industry of merchant service bureaus that will grant a merchant account and everything else needed to accept online payments.
- Integrate an online payment service. If a business doesn't have access to a merchant account or the fees are just too high, one solution is an online payment service, like PayPal . PayPal allows businesses to accept credit-card transactions and payments safely and conveniently. It also allows buyers to send payments directly from a bank account.
When a buyer indicates the desire to use PayPal during checkout, that person will be directed to sign into or sign up for a PayPal account to then complete the transaction.
For merchants there may be benefits for offering PayPal. There are no setup charges, monthly charges, minimums or gateway fees. PayPal charges a per-transaction fee, which ranges from 1.9 percent to 2.9 percent plus 30 cents per transaction. PayPal also actively fights chargebacks on behalf of online merchants. If a transaction meets all of the requirements of PayPal's Seller Protection Policy, then the merchant will not be liable to for the chargeback by the customer.
Ensuring Transaction Security
Online entrepreneurs have a responsibility to do all they can to ensure their websites offer a safe shopping experience. But they don't need to be information technology security experts to have a secure site--the techies already have developed security measures that any online small business can adopt.
There are services in this space that bring together all the security measures that an online small business needs to have in place. PayPal enables businesses to set up a website that accepts credit cards without seeing or having to store the account numbers of its customers. This makes buyers feel even safer because they don't have to share their personal or financial information online. Gateway services like Authorizenet.com, CyberSource or Paymentech will also handle credit card and electronic check payments securely.
Consumers' fears of identity theft and the aggravation over spam make privacy policies essential for online businesses. Customers expect merchants to boldly exhibit their privacy policies on their stores' sites, with links from the catalog pages and the shopping cart.
Starting an online store may seem like a daunting challenge, but the reality is it's never been easier. Today, many of the processes of moving a business online have become standardized and even automated. Business owners discover an entirely new meaning in their business lives when--through the process of building an online store--they realize they've optimized their new-found markets and won the trust of internet consumers.
The Internet, in fact, can work for any entrepreneurial personality. If an entrepreneur thinks life is just a bowl of cherries, we'll find him selling cherry bowls. Never have entrepreneurs had such a clear, easy and relatively inexpensive opportunity to reach a global marketplace for so many products and services. It's amazing how a business can thrive when its customers only need to lift a finger.
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