Published December 28th, 2015
Are you a small business owner considering your options in online credit card processing? Read on to find out what you need to know to find the right balance of services for your business.
Whether you have a brick-and-mortar storefront and you’re planning on expanding your presence online, or you are opening a new store this year, online payment services can help your business grow.
Online credit card processing allows your business to accept payment electronically over an Internet connection. Once you get your online store up and running, you can start accepting payments from more people across the US - and the world. Because of the vast potential for growth, online credit card processing services have become more popular in the past several years, and what that means for you is more choices in processing companies.
Choosing online payment services can help you supplement your in-store sales or provide the sole way to accept payment from your customers. Beginning a payment account online can provide you with speed and convenience over a traditional merchant account. A traditional merchant account is one that enables your business to accept both credit and debit payments.
Generally, you can expect smaller startup fees with online-only payment processing in comparison with traditional merchant account services. If you run a business that accepts a large amount of smaller transactions, accepting credit card payments can have a big impact on your bottom line.
Another benefit to accepting online payments is this: The more options you give your customers to pay, the more chance you have of connecting that sale with them. Online payment options mean that you can streamline the payment process to make the whole transaction more user-friendly – you’re now able to store that information to make the next purchase even quicker.
Many payment processors also offer free, secure shopping cart solution. A virtual shopping cart will allow your customers to accrue items in their carts and go through the payment process when the customer if finished shopping.
Whether you’re a mobile business, you have a storefront, or you’ll complete all of your transactions as an e-commerce business, you can benefit from third-party credit card processing providers.
Having trouble getting merchant services approval?
Because online credit card processing doesn’t have the same requirements as a traditional merchant account, this option is also well suited for a business that has a low credit score or a business that has a low amount of credit or debit transactions every month.
One of the benefits of going with a third part processing solutions is that you don’t need to go through hoops to get merchant services approval. If you’re an entrepreneur who has bad credit or you don’t yet have credit, getting accepted by a traditional merchant services provider can be difficult. Online credit card processors provide the alternative some businesses need to get their feet wet before growing to new levels.
What are some disadvantages to online credit card processing?
Because the transaction takes place online without the card present, there is an increased risk that you’ll have a disputed charge, resulting in a chargeback. If enough chargebacks accrue, you could face some increased fees or even be downgraded as a high risk business.
There are a few things you can do to prevent chargebacks as an online retailer, however. Make sure your customers understand that the name of the third-party processor – not your name – will likely show on their credit card statement. This alleviates much of the confusion that arises in online processing with a third-party solution.
Chargebacks can also occur when a customer simply changes their mind or feels like they’ve been a victim of “bait and switch”. What you can do is make sure that you strengthen customer support and follow up after a purchase. It never hurts to strengthen your after-purchase connection and remind your customers how much value the product or service will provide them.
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Hands holding credit card and using laptop. Online shopping[/caption]
Keep your customer service support strong to make sure you can diffuse any unhappy customers before the situation gets escalated to a chargeback.
In the event you are informed of a chargeback, you’ll want to call right away and see if the issue can be resolved. In many cases, it is simply an issue of the third-party processors name vs your name on the bill.
What is the cost of online credit card processing?
You may find that the cost of online credit card processing will vary. You’ll also find this is true with other credit card processing options. Lower setup and potentially lower monthly fees with online credit card processing makes it a great option for some businesses in comparison to traditional merchant processing services.
That being said, you’re likely to encounter higher transaction fees because purchases are processed online as opposed to a storefront card present sale - which comes with increased risks. Read on below for more on the security measures used to protect your business from fraud.
In regards to cost, you’ll find that many online credit card processors
will use a tiered system based on monthly sales. Generally, you can expect higher rates for larger transactions and with an increase in monthly sales.
As a business who has not yet decided on an online credit card processor, the best thing to do is call a variety of processors to enquire about setup and monthly transaction fees.
Take a look at our top 30 online credit card processing companies
for December 2015 to view a list of highly reviewed options.
What are the security features with online credit card processing?
Just like mobile and point-of-sale credit card processors, online credit card processors are required to follow the PCI Data Security Standards, with the additional layer of protection from websites that take advantage of SSL encryption.
Beginning nearly ten years ago in 2006 when the Payment Card Industry Security Standards Council was launched, businesses can now take advantage of additional layers of protection provided over the sensitive information processed every day. Not only is this great news for consumers, it is great news for you as well.
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Woman using her credit card for E-commerce[/caption]
The important thing to note is that regardless of whether you have a storefront business or you do all of your business online, if you take credit cards, you’ll need to make sure that you are PCI compliant to avoid big issues and costs down the road. For businesses that ignore PCI compliance, there are many negative consequences that will be not only a hassle but could permanently damage the way you do business.
That’s why having a general understanding of PCI compliance is important for every business owner who takes online credit cards.
It was recently reported by the PCI that there will be nearly 43 million cyberattacks forecasted in the upcoming year. That’s a very high number, which is why PCI compliance is so vital to every business owner in this digital age. Even for businesses who only process in-store payment, cyberattacks can affect them as well, depending on how they store and transport data.
As sensitive data including payment information travels during the transaction process, every interchange junction of this information is important in regards to securing customer data.
The good news is that as digital payment methods evolve, so do security methods. The security measures many businesses trusted as industry standards today may not have even been heard of 10 years ago. Technology constantly evolves and offers new ways to increase security in new ways.
So how do you make sure you’re compliant? The credit card processing company you choose will have the resources to assist you in making sure all of your basis are covered.
As stated earlier, PCI compliance applies to any business who accepts, stores, and transmits any cardholder information. Whether you’re a one-man shop or you head a large corporation, you’ll have specific vulnerabilities with corresponding security solutions.
Here are three common types of security solutions and how they apply to each type of business:
– This security measure covers the vulnerabilities for sensitive information as it is in transit. In point-to-point encryption, a math formula replaces the original cardholder data and substitutes it with new values. These new values are then decrypted on the receiver’s end. This type of security measure is what is used in online transactions.
Tokenization Technology –
For mobile payments, customer service programs, and loyalty programs, tokenization works to hide the values of the original card. The technology removes the card data so it is not stored directly on the customer’s device or with the merchant.
EMV Chip –
More cards are coming equipped with EMV chip technology. This type of security measure applies for the in-store purchase and not the online transaction, however. Essentially this type of security measure will prevent the card from being cloned. A unique code is created during each transaction and is unable to be replicated for future fraudulent use.
In addition to these types of security measures, becoming PCI compliant will also allow your business to undergo a vulnerability scan
which reviews networks, operating systems, and other devices and services.
Getting the Right Online Credit Card Processor for Your Business
As a small business owner, there are three main components you’ll want to look for in an online credit card processor:
- Simple integration to the online store including cut and paste coding with no complicated tech skills required
- E-commerce solutions for a seamless shopping card experience - including buy buttons
- Ease of use for customers – look for simplicity and avoid unnecessary steps like creating an account to complete the purchase
If you’re ready to check out some of the top companies to learn more about getting started, visit our December 2015 online credit card processors ratings
page to learn more about providers that have successfully proven themselves and can offer you the range of services you need to take the next step.