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While arguments for both sides can be made, most online retail services use a 3rd party integration for their ecommerce credit card processing. While a merchant account allows a more direct relationship with the bank, 3rd party credit card processing companies usually are easier to integrate with, charge a lower transaction fee and provide support for the customers they serve.
When your eshop handles its own credit card processing, you will have to set up a merchant account. A merchant account is a relationship between you and a ecommerce credit card processing company that they will handle up to a certain amount per month of charges from your webstore for a percentage of sales (usually 1%-3%). When you set up this merchant bank account, you will register a bank account you want funds deposited into once they clear. Payments usually are deposited within three days into your bank account.
When a charge gets disputed by the cardholder, it is "charged back" to your e-store merchant account from the cardholder's bank; hence the name Chargeback. Once a cardholder makes a request for a chargeback, the credit card processing agency will make an inquiry to find out both sides of the story. Depending on your online business, you may see a lot of chargeback issues or very few. If the ecommerce credit card processing agency agrees with the chargeback, you will have your account debited the cost of the original charge. As long as you stay legitimate, there's no reason to believe chargebacks will become a problem.
Echeck payments have been around for years, but have become more widely accepted in the past two years. An Echeck is a type of direct debit where the purchaser validates their checking account and transfers the money directly to a seller for goods or services. One of the reasons echecks have become more popular is thanks to people's use of a PayPal store. In addition to accepting credit cards for ecommerce Credit Card Processing, PayPal also accepts echecks and other debit forms, opening up a greater audience for your webstore.
About ecommerce credit card processing: The benefits are incredible: inclusion in a marketplace of 40,000 merchants, searchable product lines and credit card processing via PayPal. One of the nice things that PayPal offers is, in addition to ecommerce credit card processing, the ability to accept e-checks and global payments. Also, PayPal is a name that people have heard of on the internet, and the benefit is a more secure feeling from the customers when making a purchse from your online pay pal store. You can find out more information at the official PayPal website.
More about ecommerce credit card processing: PayPal, an EBAY company, has been around since 1999 and is considered by some the best ecommerce Credit Card Processing system today. The nice things about PayPal are that both customers and sellers are covered by their system. First, customers can pay via your online pay pal store quickly and without you having to implement a merchant account with your own credit card processing, making it easy to sell online. Second, if a dispute arises, both the customer and seller get to state their peace. PayPal is the ultimate judge of who is telling the truth, but if you are lying their arbitration staff can tell. Lastly, you can get access to monthly records that are exportable, which comes in handy during tax time!
How ecommerce credit card processing can be boiled down to a few steps. First, your customer enters their credit card information on your ecommerce web site. Depending on your ecommerce web host, the request for payment will be routed either directly or through a third party to a transaction gateway. The gateway then routes the purchase information, including credit card information, to a credit card processing agency which contacts the customer's bank via electronic means. At that point, the bank will either approve or decline the transaction. The transaction information from the bank is routed back through the gateway and to the ecommerce software on the web server. Approval or denial is then handled by the ecommerce application. While complex, the entire process will take less than 30 seconds to complete.
|Jennifer Mathes, Ph.D.|