If you’re ready to start selling your own, or someone else’s products, directly through your website, one of the first things you have to consider is how to accept payments. A large part of online transactions of this sort are done using credit cards, so naturally, you have to start exploring your options for accepting this kind of payment.
Accepting credit card payments will largely increase your income, since you’ll be able to take advantage of the impulse buyers (people ready to pay right that minute – making it possible for them to buy your product instantly means that they won’t have the additional time to have second thoughts about the purchase), as well as international customers, since credit card payment will automatically take care of the problems of currency differences, and the people in any country in the world have the option to use credit cards, and many are used to doing it.
Basics of Accepting Credit Card Payments
There are two methods of accepting credit card payments online:
- Using your Own Merchant Account (in your bank)
- Using a Third-Party Merchant Account
A merchant account is a bank account that allows you to receive payments through credit or debit cards. You can open one yourself, or you can use the services of a payment processor – many of them act as merchant accounts and payment gateways at the same time, and it’s essentially up to you which option you will choose. Compare the initial costs, the fees, consider your business model before you make the final decision.
Generally, the initial costs of opening your own merchant account are much higher, but the transaction fees are higher with the third-party accounts. That’s why, as a general rule, it’s smart to use a third-party merchant account when you’re just starting out and you want to test the water.
Some of the Best Payment Services
You have already heard about some of these, and a few of them are relatively new. Compare the prices, consider your business model (the type and volume of transactions you’re expecting to have) and go for it:
- PayPal is probably the best known payment acquirer out there. The payments are made using the user’s existing account, or with the credit card, and it allows users to send and receive money through their system. They charge 2,9% and $0.30 per transaction, and there are no setup fee, no monthly fees and no cancellation fee.
- Authorize.net is another well known payment service that is highly compatible with shopping cards, has pre-configured “Buy“ buttons and offers solutions for practically any type of online store. However, with Authorize.net you will have to manage implementation and merchant accounts elsewhere. Their setup fee is $99 and they charge $20 monthly plus $0.10 per transaction.
- Innovative Payment Processing is one of the lesser known services, but one that is getting many positive reviews. They provide integration with QuickBooks which allows you to take credit card payments right in the accounting software, making them a very good choice for startups and web retailers. The rates are low and determined by the credit card type.
- Dwolla is another newcomer, direct competitor to PayPal. Although they don’t have the same name recognition as their competitor, their fees are in many cases more attractive: no fees for transactions less than $10, and $0,25 per transaction for transactions over $10.
- Google Checkout is another Google product with high approval rating and quick and free application process. There are no setup, monthly or service fees, and the transaction fees are determined by your monthly sales volume.