Accepting
credit card payment in web-site is now within
your reach, provided you complete a few formalities.
The major requirements are a Merchant Account
and Payment Gateway service, besides upgrading
your web-site with shopping cart.
Shopping
Cart
Your website needs to be augmented before you
think of accepting credit card payment. The very
first requirement is a software called Shopping
Cart. Like a real life shopping cart in a mall,
this software collects information on every intended
purchase, calculates total amount payable and
allows customer to add new items or drop collected
items from shopping basket.
You need to install a shopping cart software in
your web-site and tone-up your product offering
pages accordingly.
Merchant
Account
You need a merchant account before accepting credit
card payment. A merchant account is an industry
term for a banking relationship or a special account
through which you and a bank have arranged to
accept credit card payments. This is essential
for all businesses who wish to accept credit card
payment - on-line as well as brick-and-mortar
shop in the market.
You will need to apply to a bank that accepts
merchant account. Normally, it takes some time
and paperwork to obtain Merchant Account. Banks
are selective while opening new merchant account
and sometimes even reluctant to accept businesses
that hadn't been in operation for at least two
years.
However, there are special merchant services that
can help you set-up an account immediately - we
shall discuss about that later.
The next step is to set-up Payment Gateway that
will act between your customer and bank.
Payment
Gateway
When you pay for something with a credit card
in a brick-and-mortar store, they swipe your card
in a machine that is hooked to a network with
the credit card companies where the transaction
is automatically executed. So, the swiper acts
as intermediary between your customer and bank.
Payment gateway is a software that acts as an
intermediary between your website shopping cart
and all the financial networks involved with the
transaction, including customer's credit card
issuing bank and your merchant account.
The shopping cart forwards customer credit card
information to the payment gateway through a secure
and encrypted connection. The payment gateway
then obtains authorization for payment from the
credit card associations (the customer's card
issuing bank) and handles the transfer of funds
into your merchant account. Because of this, you
must have a merchant account from a bank that
is on the same network as your payment gateway.
Payment gateways also check for validity, encrypt
transaction details, verify that the details are
sent to the correct destination, and then decrypt
the responses, which are finally sent back to
the shopping cart on your e-commerce site.
In addition, payment gateways have fraud detection
engine that looks for abnormality in a transaction
(e.g. billing address mismatch) and warns the
Merchant about it.
If you have already purchased storefront software,
or a shopping cart package, make sure the payment
gateway service is compatible with the solution.
Conversely, if you have not yet selected a shopping
cart, but have selected a payment gateway service,
get a list of supported shopping cart or e-commerce
applications from the payment gateway service
provider.
Is
there a Simple Solution?
The requirement list above looks somewhat daunting
and some of you may have started wondering if
its possible to fulfill it.
The requirement list is real - however there are
now many service providers who can help you resolve
many of these issues.
For example, you may avoid 'Merchant Account'
in the beginning and ask service provider to collect
payment on your behalf. There are payment gateway
service providers who help in other areas (e.g.
shopping cart) also.
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