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Most e-commerce websites accept payment by credit card. Most
people new to e-commerce find this to be one of the most
confusing aspects of setting up an e-commerce website. This is
understandable. Online credit card payments is big business and
a lot of people get a piece of the pie.
The chart below shows how a typical payment process works.
When a user makes a purchase on your e-commerce website the
payment information is passed through a Payment Gateway.
This gateway takes the credit card and order information and
passes it to a Credit Card Processing company.
The processor first checks to insure the credit card is valid
and has the required credit limit. If so it passes a message
back to the payment gateway which also informs your e-commerce
software. The processor then makes the funds available to your
company's Merchant Account. After the required
waiting period (2 to 5 days depending upon the merchant
account) the money is transferred to your Bank Account.
Every one in the process takes a little bit of money from you.
The Payment Gateway and the Credit Card Processor takes a
transaction fee. The Credit Card Account and the Merchant
Account take a portion of the discount rate (a percentage
subtracted from the total sale) as their payment.
The merchant account is the biggest player in this group and
defines several aspects of the process. The merchant account
defines how large your discount rate is. This can vary from
less than one percent to several percent of the total order. If
you are processing hundreds of thousands of dollars per month
this discount percentage can add up to a lot of money. The
difference between two and a half percent and five percent can
make a big difference. Make sure you check to see what the
discount percent is for your merchant account.
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