Credit
card is the most convenient and fastest way of
paying and receiving money over Internet. Accepting
credit card payment from your web-site can be
significant revenue source for your business and
an excellent way of converting an advertisement
and promotion centre into profit centre.
Part of the revenue generated this way may be
ploughed back to enrich the web-site and spend
more on promotion - ensuring higher traffic and
revenue without pinching your budget.
How Does the Process Work ?
Before I explain the process, it is important
that you understand the players and their roles.
There are four major elements in any credit card
payment system:
- Merchant
- Consumer or Cardholder
- Bank
- Payment Gateway
Merchant is the company or shop selling products
or services. So, if you install a credit card
payment gateway at your web-site - you are the
merchant.
Consumer, obviously is the buyer of product/service.
He/she has a valid credit card and pays through
it.
Bank is the intermediary between Merchant and
Consumer, facilitating the transaction. The bank
that issued credit card to the consumer is called
card-issuing bank. The bank that does business
with merchant enabling him to accept credit card
is called Acquiring Bank or Merchant Bank.
Above three elements are the pre-requisites for
every credit card payment systems - on-line or
off-line. Payment Gateway is a software/system
that facilitates credit card transaction in on-line
environment.
Here's how the process works - The consumer buys
a product/ service from merchant using his/her
credit card. The merchant passes the card information
to Acquiring Bank for approval through payment
gateway system. Acquiring Bank verifies the credit
card details, approves or rejects the transaction
and informs merchant about status of transaction
through the same payment gateway.
The merchant has an account with Acquiring Bank,
who buys (acquire) the merchant's sales slips
and credit the value of these slips minus processing
charge/commission to merchant's account.
So, the merchant does not have to wait - Acquiring
Bank pays the merchant immediately after a successful
transaction and recovers it later from consumer
through card-issuing bank.
The on-line approval process normally takes less
than a minute - making it one of the fastest and
most convenient for both consumer and merchant.
I have a web-site - Can I Accept
Credit Card Payment ?
Yes, you can. In fact, if you have a plan to
sell small value products from your web-store
- installation of credit card payment gateway
is an essential step in that direction. In all
probability, you may start accepting credit cards
in your present web-site - even if its hosted
in a virtual server.
How Much Does it Cost ?
Like most things in life - cost for installing
payment gateway is elastic. Its higher if you
stretch on features and lower if you settle for
economy edition. Cost also varies with vendors.
A rough estimate is as follows:
- One-time installation charge - Rs. 10,000
to Rs. 70,000+
- Annual Software Charges - Nil to few thousands
depending upon vendor
- Transaction charge of 3% to 7% on every sale
through payment gateway
So, What is the next Step ?
You need to become a Merchant before accepting
credit card transactions. Next, you need to install
a payment gateway system or integrate your web-site
with a payment gateway service provider. We shall
discuss these two steps in detail in next issues.
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