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E-commerce - Shopping Carts Articles
Accepting Payment on
the World Wide Web
If you
are
planning
to
launch a
web site
that
will be
engaged
in
ecommerce
then you
will
need to
have
some
method
by which
your
customers
can pay
for the
goods
they
will be
purchasing.
There
are two
main
ways in
which
web
sites
takes
payments,
through
a
third-party
provider
or with
a
merchant
account.
A
third-party
provider
is a
company
that
will
process
credit
card
payments
for you.
The
best-known
of these
is
PayPal,
though
there
are a
few
others.
The
advantages
in using
these
third-party
providers
is that
the
accounts
are
normally
easy to
set up,
they
have no
monthly
fees,
and
don’t
require
any
minimum
time
commitment.
However,
there
are
drawbacks
with
using
these
providers.
Firstly,
although
they
have no
monthly
fees,
the
per-transaction
charge
is
typically
higher
than you
would
pay with
a
merchant
account.
For
example,
PayPal
currently
charges
2.9% of
the
transaction
value,
plus a
$0.30
fee per
transaction.
Also,
not all
third-party
providers
have
proven
to be
totally
reliable,
and if
your
choice
of
provider
has
problems
then
your
customers
may not
be able
to
complete
their
purchases.
Finally,
some
people
don’t
like
paying
through
third-party
providers,
and
would
prefer
to use a
different
system
A
merchant
account
is the
other
method
used for
accepting
payments
over the
Internet.
This
service
may be
provided
by your
bank, or
you
could
use one
of the
many
companies
that
provide
this
service.
A new
company
may find
it
difficult
to
establish
a
merchant
account,
as most
require
that
your
credit
rating
is good.
This
could
make it
difficult
or
impossible
to find
a
merchant
account
provide
willing
to set
up an
account
with
you.
In order
to set
up a
merchant
account,
you will
first
need to
find a
provider.
As
mentioned
above,
your
bank may
offer
this
service,
but
there
are many
other
companies
offering
the same
service.
With
most of
these
companies,
in order
to open
an
account
you will
need to
pay an
application
fee,
ranging
from $25
to $100.
After
this, if
you are
approved,
you will
be
charged
a
monthly
service
fee,
normally
around
$10.
There
will
also be
a
monthly
minimum
charge,
normally
$25.
This
means
that if
the
transaction
fees you
pay
during a
month
total
less
than
$25, you
will
have to
pay the
minimum
charge.
This all
starts
to sound
expensive,
compared
to the
third-party
providers
mentioned
above;
however
merchant
accounts
normally
have
lower
transaction
fees,
typically
around
2.1% –
2.4%.
What
does all
this
mean in
real
life? As
your
sales
rise, so
do the
costs of
accepting
payments,
whichever
method
you
choose
to use.
There is
a point
where
merchant
accounts
will
become
less
expensive
than
third-party
providers,
due to
the
lower
transaction
rate.
Once you
start
doing
some
research
on
current
plans
and
prices
you will
be able
to see
where
that
point
lies. If
your
expected
sales
lie
above
that
figure
then you
will
make
more
money by
choosing
a
merchant
account.
However,
if your
expected
sales
are less
than
this
then a
third-party
provider
will
leave
you
better
off. |
