How can I save money on payment processing?

A good question. The cost of payment processing seems to something most businesses just accept. While its true there is some flexibility from vendor to vendor there is one way to save a ton of money on your payment processing. Start accepting checks or ACH payments.

Credit card transaction fees include monthly, per transaction, and usually a percentage of the transaction. When you take a check your don't have to pay the percentage of the transaction fee. Why? MasterCard and Visa interchange fees are passed on to you the merchant.

It gets worse if you don't have a merchant account and use a company like 2Checkout or Paypal your per transaction fees will eat up most of your profits. If your serious about business please get a merchant account!

The best way to save money is to get a merchant account and accept ACH transactions (checks). All that is needed from the customer is a transit routing number and an account number. These are clearly printed on all checks.

Here is a very simple example for a $5,000 transaction.
Credit card
$125 2.5% of the transaction
.30 per transaction
$125.30 Fee total

Check
.30 per transaction
$.30 Fee total.

Start taking checks today. Its as easy as taking a credit card and the savings are tremedous.

Visa Sets Global PCI DSS Deadlines

If you store cardholder data this affects you. Please read this press release from Visa.

"Visa Inc. (NYSE: V) today announced global mandates for compliance with the Payment Card Industry Data Security Standard (PCI DSS), creating a consistent framework for compliance among merchants, service providers and their agents.

The enhancements include a global set of requirements for merchants to validate their compliance with PCI DSS; and for the largest merchants, dates by which they must achieve validation. Deadlines are also set for large and mid-level merchants to demonstrate that they are not storing certain types of sensitive card data. Service provider levels and PCI DSS validation requirements have likewise been aligned under a global standard and compliance timeline. Compliance with PCI DSS will help protect businesses from financial and reputational harm that often results from cardholder data compromises. Visa data security compliance programs have provided compelling incentives for merchants and agents to properly secure cardholder data.
The new framework establishes the minimum requirements for Visa Inc. regions. As an independent company and licensee of Visa International for the business operations in European markets, Visa Europe's PCI DSS framework requires compliance validation and risk mitigation for Level 1 merchants; however the region will be adhering to a different timeline and process for executing compliance validation.
"Compliance with PCI DSS is vital to ensuring the integrity of the global payments system," said Eduardo Perez, head of global data security, Visa Inc. "Aligning compliance programs across the Visa regions is the latest step in our commitment to safeguarding cardholder data."
MERCHANT VALIDATION REQUIREMENTS
Alignment of Merchant Levels and PCI DSS Validation RequirementsA comprehensive set of international security requirements for safeguarding cardholder data, PCI DSS was developed by Visa along with the four other founding payment brands of the PCI Security Standards Council. Compliance is required of all merchants and any entity that stores, processes or transmits cardholder data. " more...

Accepting ACH or Check Transactions

ACH transactions have been around a long time. 75 million Americans use checks instead of credit cards, and with the advent of the web and ecommerce they are easier than ever to use. ACH transaction fees are often much lower than credit cards so it makes sense that you should offer this option of payment to your customers.

Payments Gateway
Most payment gateways will allow you to send over a ACH or Check transaction. This can be done from your website or customized software. The gateway will return an Approved or Declined message similar to a credit card.

Checks by phone
Checks (ACH) can be collected by phone using a Virtual Terminal. The Virtual Terminal will allow you to login to a website and enter the check Transit Routing Number or TRN and the account number along with the customer information. Checks by phone or using the Virtual Terminal to perform check transactions allows you to get up and running very quickly. All you need is an internet connection.

Accept Checks Online
Ecommerce shopping carts are often integrated into the payments gateway out of the box. This means you can accept checks on your ecommerce site quickly and easily. Customers never need to mail in checks again when you start processing transactions at your web site.

Major Benefits of Online Check Acceptance

• Accept transactions similar to credit cards using TRN and Account Number.
• Offering an additional payment option will increase sales.
• Access to funds within 48 hours.
• Automatic deposits to your business checking account.
• Low low transaction costs. Half the cost of credit cards..
• No more paper statements.

Accepting Credit Cards

So your customers are complaining that you don't accept credit cards. What do you do? Well you can accept cash only, or break down and get a merchant account. A merchant account will allow you to accept all major credit cards MasterCard, Visa, American Express and Discover.

The first thing the merchant account provider will ask is what kind of business are you doing. They are usually broken down in to three major categories. ecommerce and internet, retail, mail order telephone (moto). Depending on what type of business your doing and how your doing it will affect the prices you receive.

eCommerce and Internet
When doing e-Commerce type transactions you'll need a Virtual Terminal and a Payment Gateway. These should be included in your merchant account. The Virtual Terminal is like a credit card machine but for the web. The payment gateway allows you to perform transactions on your website.

Retail Credit Card Processing

Normally for businesses with a POS terminal. The terminal will allow you to swipe a credit card at your point of sale.

Mail Order and Phone
These types of transactions can be either done on a Virtual Terminal or physical terminal.

Quick Books Transactions
Quick books is a popular accounting software among small businesses. The software covers most types of businesses and allows you to perform transactions from within it.

Payment Gateways

A payment gateway provides a way for a merchant to accept credit cards and in some cases eChecks or ACH transactions. The merchant can send transactions in a variety of ways, either from a website, terminal or even a batch. The transactions are encrypted using SSL (Secure Socket Layer). The gateway authorizes credit card payments by directing those transactions to the appropriate card association,Visa, MasterCard, American Express or Discover. The response is then directed back to the merchant securely. When done in real-time it say for a website can take anywhere from 2-3 seconds. eChecks work a little differently but are usually have the same response time.

Where can I get a Payment Gateway?
Payment gateways are usually offered by a merchant service provider. Normally they come standard with a merchant account, there may or may not be fees associate with using a payment gateway. Before you sign up for a merchant account be sure to ask if it includes a payment gateway among other things.

Sending Transactions

Most gateways allow multiple ways to send transactions.

• Credit Card Terminals - Normally used in a POS environment.
• Batch - Some merchants will close out at the end of the day and send them all at once.
• API's - Used for e-commerce allows an instant response for a transaction.
  

Additional Features

Some payment gateways do more than just process transactions. Here are some additional features offered by some gateways.

• Identity Verification - check on a customers address, drivers lic. etc.
• AVS - Address Verification Systems check a customers address matches their credit card.
• Check Verification - Can be used to verify if a checking account is closed, frozen, etc.

Merchant Accounts

This should have been my first post, but #3 ain't bad. If your serious about business your going to need a merchant account. It's normally one of the first things a business needs to do besides a DBA etc. A merchant account lets you accept credit cards like MasterCard, Visa, American Express and Discover. Some also let you accept checks or ACH transactions. Once a sale has been made using a credit card that money is deposited into your account. The main reason you want to accept credit cards is to increase sales for your business.

Merchant Account Fees

There is a fee or more likely fees involved you will need to pay. Here are some, they will vary depending on your provider, credit history etc.

• Set Up Fees - A one time fee around $50 to $200.
• Monthly Gateway - $9.00 to $20.00
• Monthly Statement - $9.00 to $20.00
• Discount Rate - 1.00% to 3.00% per transaction, credit card only.
• Per Transaction Fee - .25 to .50

Of course these are very rough numbers, but you should look for a merchant account that falls within these ranges.

Merchant Account Set Up

The merchant account provider will have you fill out an application either online or via fax. They will ask some questions about the business and do a credit check. Depending on the provider some businesses are considered a high risk and won't be approved no matter how good the credit rating. These businesses would be check cashing, gambling, adult industry and others. Save time by asking if the merchant account provider will accept your type of business. In some situations they may raise fees to accept a high risk merchant. Once approved you can begin to accept credit cards.

Other Merchant Account Features

Some merchant account providers can bundle other services either for a fee or free. These can include:

• Identity Verification
• Check Processing
• Check Verification
• Check Recovery
• AVS or Address Verification
• Batch Processing
• Enhanced Gateway Services
• Client Management
• Virtual Terminal Access
• SSL Hosted Payment Page

Start Making Sales

If you haven't got a merchant account yet what are you waiting for? The fees do sound like a lot but pay for themselves quickly when your sales increase. You'll have more customers and more sales and who can argue with that?

Shopping Carts for e-commerce

What is a shopping cart?

Much like the shopping cart in your local grocery store the e-commerce shopping cart holds your items until your ready to pay for them. For example you can add a widget to your shopping cart and continue to browse the site add more items then pay for them all at once. When the Internet was just getting started e-commerce consisted of finding an item then being directed to a payment page and paying for it. This had many draw backs the main one being that you couldn't pay for more than one item, for goods to be shipped this was an even bigger problem since shipping costs couldn't be consolidated. The electronic shopping cart changed all that.

Database driven shopping carts

So lets go back again, the web was great at displaying a static web page. The page could include a picture showing the product with some helpful text telling what it did or why you needed it so badly. What about if you have 25 products, no problem you can put more than one product on a page. When you started getting into 50 or more products you might start pulling your hair out. When your supplier changes prices or UPS ups their price you wouldn't have any hair left. Here comes the database. The database allows storage of your products and more importantly allows the creation of dynamic pages. These dynamic pages are built using the data in the database.

Shopping carts support a number of different databases depending on the one you choose. For example OsCommerce supports mySQL. ASPDOTNET storefront supports MSSQL. The database only really matters when choosing a host. Since mySQL is an open source database the hosting is generally cheaper.

Shopping cart features

There are many many shopping cart features. The ones that are important to you depend on your business. Some of the more important ones would be.

• Which payment processors or gateways are supported
• What are the shipping options
• How may products does it support
• How easy is it to customize
• Price
• Does it offer search engine friendly URLs

Payment processors

Probably the most important question to ask is, does it support my payment gateway? The payment gateway service should be included with your merchant account. Every shopping cart should have a list of gateways supported. This just means that they have programmed the cart to work with the payment gateway out of the box. For example Zen Cart supports a number of payment processors. For example you, with a simple change of a setting send your payments to the Authorize.net gateway. That is all that is required to start taking orders on your site. The cart already knows where to send the transactions.

Keep it simple

Choosing a shopping cart doesn't have to be difficult. Do you homework upfront and you should be fine. Changing shopping carts is not something you want to do because you'll have to re-enter all your products. Don't enter all your items until your sure your going to stick with a shopping cart. Also remember free shopping carts are supported by developers, so getting technical support could be a challenge. We've had both free and paid versions of shopping carts and it seems free shopping carts offer greater flexibility when it comes to payment processors and other features. Good luck!