March 17, 2022
There’s no question that any ecommerce provider has to be able to accept credit card payments online, as that’s the way that most of your customers will choose to pay. While accepting credit card payments for small businesses in particular may be a costly expense, it is a very necessary part of the cost of doing business. These costs don’t have to be exceptionally high, however. You can choose how to take payments online - which types of credit cards or other payment methods you will accept. Part of your decision may be based on cost, but you should also keep in mind how your customers will want to pay so that you can make sure you do accept the payment methods that your customers are most likely to use.
It is definitely worth taking the time to do some research and investigate the best payment methods for your business. Take into account all of the options and what the costs of each one will be. This article will give you a broad overview of the different ways you can accept credit card payments online and the tools you need to do so.
The first step that you must do before you can begin to accept payments online is to open a merchant account. This is a special type of bank account into which funds from customers’ credit card payments are transferred before being moved into your business account. The fees that you are charged when you take payments online are generally charged by the merchant accounts and can range from 0.5% - 5% of each transaction and/or a flat fee of 20-30 cents per transaction. There also may be monthly or annual fees depending on the provider.
Unlike with a brick and mortar store, if you are a purely ecommerce outfit and all of your transactions take place only online, you do not need to purchase any hardware in order to accept credit card payments online. Rather you will need an online payment infrastructure that will enable you to process payments (more on that below).
When you are considering how to take credit card payments and what will be the best option for you business, following are important issues to keep in mind:
Once you have the costs figured out, you must also consider how to accept credit card payments - the specific ways that you can give your customers access to the ability to make purchases using their credit cards. Some of the most common ways include:
If you’ve built your ecommerce site using tools like WordPress or Wix, you will have easy access to an assortment of third-party apps, extensions and plugins that you can add to your site and easily accept credit card payments. Simply ask your site developer or - if you built your site yourself - look in the dashboard for the available tools and select the ones that work best for you.
Many payment processors support payment buttons, which are exactly what they sound like. You can add a payment button to your site (such as a “buy now” button) which directs customers directly to a checkout page where they can enter payment details.
If you already have a website, you may prefer to add an ecommerce payment option rather than starting again from scratch. If you haven’t yet created your site, however, you may want to consider purchasing an all-in-one shopping cart software solution. These types of solutions will also make it easier to sell across platforms and allow people to purchase from you via social media, eBay or other platforms in addition to your website.
If you want to keep things simple, you can use a hosted payment page which is a secure checkout page that is hosted by your payment processor. Customers are redirected to that page where they can enter their payment information. An example of a hosted payment page is PayPal - when the customer chooses PayPal as their payment option, they are always redirected to the PayPal site to enter their information and then are returned to the purchasing site.
Another upside to hosted payment pages is that means you can accept credit card payments online but the information is never stored on your server, reducing the chances that your site would be involved in any sort of data breach or hacking.
Another option is to use online invoicing software in which you generate an invoice that you send to a customer. They then click on a link within the invoice and are directed to a site where they can input their payment information. This is less of a streamlined process and you may find yourself chasing people for payment more often than not.
Finally, most social media platforms like Facebook and Instagram offer options that allow merchants to sell directly from their profile.
As a business owner, you are probably interested in keeping your costs down while still providing your customers with the best possible buying experience. As described above, you cannot avoid paying fees in order to accept credit card payments online, but there are ways that you can keep costs down.
While they technically do not involve credit cards, automated clearing house (ACH) transitions are the most cost effective way to accept payments online. In this type of transaction, the funds are transferred directly from the purchaser’s account into the seller’s.
ACH payments usually have lower transaction costs than credit card payments, but they come with an opportunity cost. They are not approved automatically like credit card payments are and it can take longer for the money to show up in your account. In order to complete an ACH transaction, the customer is required to enter their bank account information - something that many people don’t know off by heart or are not necessarily comfortable doing.
The ability to accept credit card payments online is a must-have for any ecommerce site. This is the way that the vast majority of customers will want to be able to complete a purchase. Unfortunately, there is no free ride when it comes to accepting payments online, but there are a range of processing options and you can check out all of the different fee structures and find the one that works best for you and still leaves you with a healthy profit.
Debit cards are similar to credit cards in the way they are accepted as a payment method online. The difference between the two is that the customer must have the money in their account in order to use a debit card as the funds are deducted immediately, as opposed to a credit card in which the cardholder can pay the bill at a later date. From the merchant’s perspective, the fees are usually very similar.
Other payment methods in addition to the traditional credit and debit cards are becoming more popular with the advent of solutions like PayPal, Apple Pay, Google Pay and others. Rather than inputting credit card information, the buyer simply chooses the payment method they wish to use and at the click of a button has access to the information they’ve previously saved in that particular app and can use it to make payments quickly on other sites. Today’s customers are all about convenience and speed, so when considering the best payment methods to offer, it’s worth your while to consider the mobile payment options. The fees are usually fairly similar to credit card transaction fees.
The low-cost online invoicing option may seem cost effective, but it is probably not that practical for most ecommerce providers. If someone is buying from your site, you want them to pay you directly and immediately rather than have to send them an invoice and expect them to pay it later. If, however, you do feel that it makes sense for your business, low-cost online invoicing is a less expensive way to accept credit card payments online.
Once you decide to accept payments online, there is infrastructure that you will need to set up before you can start to take payments. The two main tools that you need are a payment gateway and a payment processor.
A payment gateway serves as the connection between your ecommerce store and your merchant account. It tells you whether funds have been approved to be moved from the card issuer’s bank to your merchant bank account. Often, you can purchase an all-in-one combination of a merchant account and payment gateway which will probably save you on setup fees, although you may still have to be separately approved by two different entities.
Once you are approved, you simply connect your merchant account to the payment gateway and then the gateway to your online store. If you need help, the customer service department of the payment gateway company should be available to you for troubleshooting and any other hand-holding you may need during the process.
The payment processor is the tool that actually facilitates the transfer of funds from the buyer to the seller. Pay.com can integrate with many different payment processors, giving merchants plenty of options when considering how to take credit card payments and other online payment methods.
Pay.com can help you throughout the entire process of setting up your infrastructure and getting ready to know how to accept payments on your website. You can choose from the many payment methods that Pay integrates with to be sure that you are offering your customers a variety of options. It’s also very easy to add and remove payment methods as your business grows and changes. For example, Pay’s dashboard will show you all the data so you can clearly see how many people are using each method - if very few people are using a certain method that costs you money, you can get rid of that option at the click of a button.
It’s hard to imagine a scenario in which it would not make sense for a business to accept credit card payments online in today’s day and age. The pros way outweigh the cons if you expect to grow a viable business. People are much less inclined to use cash, and cash purchases over the internet would be very complicated.
It’s good for your business to accept credit card payments because of the convenience to your customers and the fact that people tend to spend more when using a credit card as opposed to cash. So, even though accepting credit cards does come with a cost, you are likely to more than recoup that cost with the higher number of customers you will attract and the larger amounts of money they will spend on your site.