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An eCommerce Primer
Copyright © 2006 John Jantsch
Many small business owners will find the need to accept credit card
payments for products and services offered on their website.
When I set up my first ecommerce website I found the information
surrounding online credit card purchases to be more confusing than
any other aspect of marketing on the Internet.
The reason as it turns out is that the various organizations
offering to advise you on how to set online payment systems up have
conflicting interests and, in some cases, no idea how the systems
work together.
The other potentially confusing aspect of online payments is that
the entire system involves a number of service suppliers each
providing one element of the entire chain. The real trick is getting
them all working together.
So let me outline the parts and then give you a couple of
suggestions for how you might approach an ecommerce system for your
business. (There are dozens of ways to get the same thing done!)
Internet Merchant Account - In order to take online payments, when
you don't physically swipe a credit card, you need an Internet
merchant account. This account can be issued by your bank or by a
host of companies, such as Merchant Warehouse, that offer Internet
merchant accounts. It's important to note that if you already have a
merchant account for your store or business, you will need to get an
Internet account as they are different. This account will include a
set-up fee and some % per transaction fee.
Most banks only provide merchant accounts for Visa and MasterCard.
It is a very good idea to offer American Express and Discover card
payment options. In order to do this you need to contact American
Express and Discover and activate accounts. Once you have this
information you can provide it to your merchant account provider's
payment processor to process all four cards in the same account.
Virtual Terminal - A virtual terminal is an add-on service that
comes with your Internet merchant account. This allows you to take
phone orders or in-person workshop orders and then go to a secure
Internet based site and process the orders into your account.
Secure Payment Gateway - Since Internet traffic is susceptible to
eavesdropping you will need a secure payment gateway that allows
your customer's credit card data to be secure as they place orders.
This is yet another service provider that specializes in secure
transaction and takes the secure data and passes it through a secure
gateway to your payment processor. You want to make sure that this
part of the process works with your merchant account and your
shopping cart. I would stick with one of the leading gateway
providers. This would include Authorize.net, VeriSign and SkipJack
There is a fee for this service as well. It is important that you
communicate who your gateway provider is to your merchant account
provider.
If you are selling goods that are available to download immediately
you will also need what is known as real time processing from your
secure processor. This is simply a connection that gets a credit
card transaction approved or declined in real time as a customer
places an order. There is an additional charge for this service.
Shopping Cart - shopping carts come in software and hosted service
based versions that allow your customers to shop for multiple items
and then pass the order to your payment system by way of checkout.
This service is very important if you have multiple products
available on your web site. There are some very stable, fully
functioning shopping carts that are free or very low cost. Some
leading cart systems include osCommerce, zencart, and 1ShoppingCart.
I must repeat that you need to make sure that your shopping cart is
supported by your payment gateway and vice versa - just ask.
Third Party Processing - There is an alternative solution to the
entire puzzle known as a third party processor. In this approach,
the third party provider may offer all of the processing and no
merchant account is required. The drawback to this approach is that
you generally pay a higher overall fee per transaction and have
limited ability to customize your customer's check out experience to
match your website. PayPal, an eBay company, is the largest provider
of this approach and is a very acceptable option.
A Few Words of Advice
Each piece of the ecommerce puzzle comes with a fee, either as a
monthly set price or on a per transaction basis. Make sure that you
understand what the fees are. Online merchant account providers are
notorious for charging very high application and set-up fees. Start
with your bank, but shop this aspect around. Most small business
owners should be able to set-up a fully functioning, real time
processed site with a shopping cart for less that $150/mo (not
including per transaction fees)
Make sure that you find out which parts work well with each other.
In other words, when you are looking for a shopping cart or payment
processors make sure that they integrate with your real time payment
gateway and vice versa. If you stick with the big names in each
category you shouldn't have any problems.
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John Jantsch is a marketing coach, author and creator of the Duct
Tape Marketing System. You can get more information about the Duct
Tape System and download your free copy of How To Grow Your Small
Business Like Crazy by visiting
http://www.ducttapemarketing.com/