Accepting credit cards online can be a confusing process. Author Heidi Good explains the five crucial parts of a full-scale e-commerce solution, and where to go to find what you need.

by Heidi Good

There are five separate parts to any full-scale e-commerce solution. Many vendors provide from one to all five parts necessary for establishing real time credit card sales. This makes evaluating and comparing the services which you are considering extremely difficult. Generally each part of the system has a cost associated with it. I have seen people thrilled to find they have obtained a merchant account with a 1.85% transaction rate only to discover that it came with a locked-in four year equipment lease and was not usable on the web! Be informed. Understand what is involved so that you can find exactly the service you need.

Here are the five parts of full e-commerce:
1. An Internet approved merchant account
2. A shopping system of some kind
3. A secure encrypted means of transferring the transaction
4. A real time credit card processing service
5. Fraud protection

1) You need an Internet-approved credit card merchant account that will accept at the minimum MC, Visa and AMEX. Even if you already have a retail merchant account, do not assume that it may be used on the web as most banks currently will not allow it. Many companies are now selling Internet merchant accounts with flashy misspelled websites. They make me nervous and I stay away from them in my e-commerce consulting practice, no matter how good the deal looks. If they did not bother running a spell check then they are in too much of a hurry to be good business partners for me. I stick with established companies with several years of experience working with Internet businesses.

Vantage Services is a company I can recommend for merchant accounts. They have been working with Internet merchants for years now. You can check out their offer for merchant accounts at https://MediaTalent.Net/Produc ts/Vantage2.htm Their "ECHOnline" account for Internet merchants offers a 2.57% discount rate and .32 per transaction with no equipment lease or ongoing obligation.

2. You must have an order-taking system for your website. This is usually some form of shopping cart software, store catalog application or a simple stand-alone CGI program that tracks the customers purchases, totals sales, adds taxes and shipping, etc. This can be as simple or as complex as you require and your choices are expanding rapidly. You can start with a simple free shopping cart service from any one of the online services such as 321website. Of course these systems range in price from little or nothing to expensive, depending on the complexity of your needs. Depending on the solution you choose, it may not be as easy as you might hope to hook your shopping solution to your credit card account. Be prepared to seek professional help with this step if necessary.

3. You will need a secure encrypted method of obtaining and storing the credit card data. This is usually SSL (secure socket layer) encryption, which, to my understanding, has never yet been broken by hackers. You absolutely must provide this layer of protection for both yourself and your clients. It is not acceptable to send credit card information by email anymore.

SSL is included as a service with most 3rd-party shopping cart systems and with most real time transaction systems but would not be included if you decided to use your own CGI scripts on your server to handle processing. In this case you need to contact either Verisign or Thawte for your own secure server certificate, then install the SSL service on your server and thus guarantee secure encryption to your clients. You may even find that you bought web space seeing that your host offered "SSL" as an option. Once again beware, the ISP host will offer you the SSL software running on their servers, but often you must still buy your own SSL certificate from Verisign for $300 to use it. (Verisign: https://www.verisign.com/ )

4. You must have a real-time credit card transaction processing system. This part of the system securely accepts the customer's credit card and purchase details and performs the bank transaction live at the time of sale. Email confirmations, minus the credit card number, are then sent to the client and the merchant.

Many people seem to be under the impression that this part of the service comes with their shopping cart, or comes with their merchant account itself. Generally it does not. Your business must obtain the online equivalent of the retail store's credit card transaction terminal. If you do not, you must hand-process all of your transactions, re-entering them into an off-line terminal for approval and funds transfer. Granted, it is possible to run your web business using an off-web merchant account and a retail terminal but it quickly becomes cumbersome if you have more than five or six sales per day.

Some merchant account services have great transaction rates until you discover that they require you to lease their retail transaction terminals. This is great if you need one, but a waste of money for most Internet merchants. Real time Internet transactions provide you with instantaneous credit card approval with the funds transferred to your bank account almost immediately.

The company providing your real time transactions is one of the most critical business partners which you will choose for your merchant services. Choosing a service with an unreliable server, a clumsy interface, or an insecure process will cost you business. Cybercash is the most well known of the real time transaction services but others are now competing widely.

5. Finally, you need a form of fraud protection for your transactions. This can be as simple as performing a checksum on the credit card entered to ensure that it is a good card number, address checking, duplicate order checking, capturing orders sent using free email, stolen card check and many more tricks of the trade which will protect your business from the growing fraud problem.

Small merchants with high ticket items are targeted by Web criminals because one theft from a small merchant is not enough to engage the fraud division's attention, thus a low risk for the criminal. The higher your ticket, the greater the necessity that you invest in these services. Most Internet merchant services have minimal fraud protection. That is why you do not hear much about it. Remember, if a criminal places a fraudulent order, and you, the Internet merchant, do not have a signed credit slip, you are completely at risk.

If a fraudulent transaction is processed you lose:

- the value of the stolen item

- the percentage and per transaction charge on your merchant account

- the penalty charge for a bad transaction from your merchant service provider when the transaction is reversed.

All of these equal a substantial loss to you.

[Editor's note: You also run a risk of losing your merchant account if you have too many charge-backs, particularly if they're for expensive items. Protect yourself by reading - and following - Don't Be Victimized by Online Credit Card Fraud - Prevention Tips]

With all five pieces of full scale E-commerce carefully selected and integrated into your website you are ready to forge ahead with cost-effective and trouble-free Internet sales.

I hope this information will help guide you on your search for a solid e-commerce solution. If I, or any of the consultants with the Media Talent Network can assist you in locating an appropriate, affordable and reliable e-commerce solution, please give us a call: (604) 454-1516. Our E-commerce consultants specialize in locating and implementing the perfect merchant solution for your web business. International merchants are particularly welcome as we can now provide all 5 of the above services to international businesses, providing secure transactions in either US or Canadian dollars.

Heidi Good is President & Technical Director of the Media Talent Network, contracting the services of the finest self-employed multimedia and marketing talent to produce successful e-commerce business plans.

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