Credit Card Processing: What Online Businesses Need to Know

Article Written By: marcialopez

If you re operating, or planning to operate, a business online, you need a merchant account. Studies show more than 900 percent of online shoppers use credit cards to make their purchases, so the need for a merchant account is obvious. Consider the following tips when selecting an account for your business:

There are essentially two types of Internet merchant accounts: delayed processing accounts and real-time accounts. The first is less costly than real-time accounts, but they require a business representative to intervene in the sales process, meaning they are a good choice only for businesses with lower sales volumes and those that do not mind the daily interaction with the online sales process.

In the delayed processing system, credit card information is entered via your online shopping cart system. But rather than being processed immediately, it is stored until later in the day, when you or your representative must retrieve the information and then re-enter it manually for processing. Real-time or automatic processing is much more convenient, but you pay for that convenience with higher fees. In a real-time system, information is gathered by the shopping cart system and then transmitted instantly and automatically to the card issuer via a portal known as a gateway provider, which also offers added security for online sales.

Once the information is transmitted to the card issuer and the card issuer approves the sale, a virtual receipt is issued and the card issuer transfers the amount of the transaction to your provider. At the end of the business day, the provider adds up daily sales, subtracts the cost of any maintenance and fees, and deposits the remaining money into the you business bank account . No intervention is necessary by you or your representative in these systems.

In addition to your website, you will need a shopping cart system capable of accepting credit card information and other sales information. For real-time accounts, you will also need a gateway provider. Ideally, you want to select a provider with extensive experience handling Internet businesses. An Internet business has vastly different needs than a retail business, and is also at a higher risk for fraud. Why? Because online sales are essentially anonymous; that is, they don t require the buyer to be face-to-face with the seller. As a result, you want to choose a provider that can deal with issues of fraud successfully.

Internet merchant accounts have higher fees than retail accounts, since they are subject to higher levels of fraud. Fortunately, many fees and costs have been significantly reduced in recent years, and some have been entirely done away with.

Regardless of what type of online business you operate, it s important to find a merchant account provider you can rely on. By using the information above, you can make a wise decision and watch your online business bloom.

About the Author

Marcia Lopez - North American Bancard.

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