Ecommerce Online shopping volume continues to grow at a breathless rate; online shoppers spent $30 billion during the holiday season last year, a 30% increase from 2004. The full-featured online payment gateways make this growth possible. A shopper is never more than a few keystrokes away from his purchase - he can act on a whim before his judgment has time to kick in. And there's no reason for any small business or individual for that matter to miss out. There is still a common misconception that to do business online you need to apply for a Merchant Account, sign up with a Secure Payment Gateway and integrate the two, with all the accompanying effort and expense. You don't. The Slow Way: Merchant Accounts & Secure Payment Gateways Most everyone has heard of Paypal, but not everyone understands how Paypal (and other third-party Online Payment Processors), Merchant Accounts and payment gateways relate to or differ from each other. A Merchant Account with your bank or other financial institution allows you to accept credit cards. To get one, you usually have to go through a credit check and pay a setup fee of $100 or more. Your website needs to connect to the Merchant Account, and this is where the Secure Payment Gateway comes in. Your Merchant Account should identify one or more payment gateways that are compatible with their system, and to use one of these you can expect a setup fee of several hundred dollars, monthly fees, and per-transaction fees. The Quick Way: Third Party Processors Third party online payment processors greatly simplify the whole process - you simply pay a (usually higher) percentage of sales as a transaction fee. The payment processors available today will allow you to accept online payments within a day or two after a simple verification process, without any hassle of qualifying for merchant accounts. Usually no deposits are required and there are no monthly fees. These are often the best option for small businesses and startups to be able to do business online very quickly. Accepting credit card payments online is standard for any online payment system since the majority of online shoppers pay with their credit cards. However, some 10% of buyers actually don't have or prefer not to pay via credit card, so you may also want to consider accepting online checks, debit cards and digital cash. Many of the current online payment services also allow customers to transfer funds directly from their bank account. The more flexibility you give your customers, the more likely they are to make a purchase. Get Started! Thousands of small businesses and potential entrepreneurs still hold back from doing business online, mostly due to imaginary technical or logistical obstacles. With third party online payment processors, you can turn a business idea into revenue within a day. Look around and assess your options - don't just go with the bank's recommended Merchant Account and the large payment gateways such as Authorize.net and Cybercash. You will save on setup and monthly fees by starting off with a smaller third party processor. The downside is that you will pay higher transaction costs per sale, but this is worth it in the short term. When your business is up and running and bringing in cash, you will have the option and means to consider getting a Merchant Account. |
