The small fees and charges involved in processing transactions are often not clearly visible. This is even more evident in online or eCommerce transactions. The key is to find a solution that works for your business and at the same time is cost-effective as possible. As you review your options, here are some specific things to consider.
Table of contents:How integrated do you need your solution to be? Gateway, API or direct Processor Integration? Does your processor specialize in eCommerce and the types of products that you sell? Processing Charges Do you know what you are signing and is it a contract?
How integrated do you need your solution to be?
Online payment processing can span anywhere from a simple “pay now” button on a page to a completely integrated eCommerce solution with a shopping cart and multiple products. If you are just looking for easy place for people to make a payment for a single product or service, a payment page may be all you need. When you start moving towards multiple products, special promotions, shipping and inventory, a shopping cart becomes a must.
Gateway, API or direct Processor Integration?
Don’t be afraid…although these terms sound technical they aren’t really that difficult to conceptualize. Here are the differences. A gateway is a third party company that allows your shopping cart to “talk” to the processor of your choice. Most processors use this option because they only have to pay for integration to the gateway, not to multiple shopping cart companies. One of the most prominent gateways is Authorize.net. To use an API, you must have a background in website coding (or have a designer that does).
This is the most costly of the three, but allows for the most customization and the most options. If you are looking for special functions and features, this is the way to go. The third is direct processor integration. This means that the credit card processor that you are using talks to the shopping cart of your choice. Although this is somewhat rare, it can be a simple and painless way to get going and will eliminate the cost of gateway fees and paying a web designer to build it for you.
Does your processor specialize in eCommerce and the types of products that you sell?
Every business focuses on different “niches” and credit card processing is no different. The majority of payment processing companies look for low risk, retail/restaurant businesses that have lots of card swiped transactions. This is not a category that you will fit into. eCommerce business is deemed higher risk simply because the card is not present.
Combine that with a high ticket transaction, product type and possible international sales and you have a risk level that exceeds what some companies are willing to handle. Make sure you fully explain your product as well as who and your target market to your company. Not doing this upfront and getting the right fit can result in your funds being held or your account being cancelled.
Ok – if you have made it past the first two hurdles, now we need to figure out the third – processing fees. The world of eCommerce for most is very mysterious to most and because of that, it leaves an opening for many processors to create fee categories to use to their benefit. The fact is processing is processing.
The only real charges that are involved are usually a statement fee that should be under $10, your actual rates, and a gateway fee (if you are using one – again this should be $10 or less). If you are just getting started, watch out for things like monthly minimums, annual fees, set-up fees, technology fees and the like. These are just profit centers that provide nothing more than extra cost for you.
Do you know what you are signing and is it a contract?
Sadly, many of us sign agreements without having the first idea what we just committed ourselves to. Although all of us have done it at one point or another, a merchant account is one place where you want to take some time and care. Most processing agreements are like cell phones service – a three year contract.
I think most would agree, a lot can change in three years and the unfortunate truth for many startup businesses is that they may not ever make it past the first 6 months. Make sure that you get something preferably month to month or at most, 1 year. This way you limit your risk to something manageable. While discussing this with your rep, also ask what the cancel or early termination charge is…just in case.
Getting your website set up to accept payments doesn’t need to be an epic undertaking but you will want to do some research and take some time and effort in the process. This time invested upfront will ensure a successful marriage and smooth sailing in the future. As with any relationship, the best time to find out if it is a match made in heaven is before you are committed, not after you have already walked down the aisle.
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