More on Your Grand Opening: Payment Gateway and Merchant Account For Your E-Commerce Endeavor

How do you shop in real life? Chances are, your answer is that it depends. The grocery store run you make a couple of times a week is one thing. What about shopping for a car? What about finding a birthday present for a good friend?

Of course, all shopping trips have one thing in common. You have to pay for the merchandise. You may write a check; you may swipe a debit card; you may dig bills and coins out of your pocket. However you present payment, if everything goes as planned, it probably takes less than a minute for the transaction to be completed. As a consumer, this is the easy part.

It isn't so easy for the retailer. Taking payments involves a complex set of steps all of which are extremely critical. They must work with credit and debit card processors; they must find the processor that provides them with the best rate; the must accept payment in many forms; they must ensure that the correct prices are stored within the POS system. They must generate receipts. They must be able to accept exchanges and returns. This includes granting store credit, crediting money back to debit cards, and giving cash refunds.

Obviously your e-commerce store won't include a harried cashier dealing with a long line of customers, a product that won't scan, and the failure of a credit card reader. However, you will need to deal with the very real problem of fraud. Also, when people go shopping at regular stores, they are interacting with other humans. This makes them more understanding when a card reader doesn't work, or when a product scans for the wrong price. If something goes wrong in the check-out process in your e-commerce store, you don't have the luxury of an apologetic cashier. Your customers will simply click away.

This is the reason why point-of-sale is hugely important in e-commerce. It is a place where your store needs to shine. Pick a good POS software package and you are on your way. Here are some of our recommendations:

How do you receive payments online?

This involves a payment gateway and also a merchant account. It will cost a premium, but you can purchase a solution that covers both. It may be helpful to define each of these.

Let's start with the merchant account. This is the gateway between your business and the credit card company. Payment goes into your merchant account when your customers check out and make payment. It then goes to your company's account. You will pay for this no matter what. If there are a lot of returns due to NSF status, you will pay more. This is because the bank behind all of this is taking on a higher level of risk.

A separate, but certainly related part of this, is the payment gateway. This is your interface to your merchant account. When you receive a customer complaint and decide to issue a refund, you will go through your payment gateway. If you allow customers to make time payments, you must set up a billing system. This is also done via the payment gateway. A good payment gateway will also include a built-in fraud prevention system. Your cost for all of this will depend on the volume of transactions that you process.

The Best Way to Choose a Merchant Account

As you shop for a provider, you will notice that a Merchant account provider is also known as a payment processor. Many of the names in the industry will be familiar to you. Surely you have heard of PayPal and Chase. You may have even heard of Flagship, Merchant Warehouse and LikeTransfirst.

Your e-commerce store can literally die due to excessive fees. So pay attention to that. The discount rate includes a fee that is a percentage-based royalty on everything that you sell. Then there are the service fees. This will include a fee per transaction. In addition to this, you will have a monthly fee. You may find that you are better off paying an up-front fee instead of being nickeled and dimed over every transaction. Decide this based on business volume. If you have less volume, you might be better off paying the per transaction fee.

Look into other restrictions. They may be hard to find, but they can impact your business. If you are having a boom in sales, you don't want to run to the brick wall that is known as a daily or monthly transaction cap. Nothing will drive customers away faster than having their orders and money turned away. Also, don't rely in fly by night operations. Your customers are trusting you with their money. Respect that choice and use reputable finance companies. That way you know that you have both reliability and trustworthiness.

Choosing the Optimum Payment Gateway

You will interact with your payment gateway on a daily basis. Choose one that is easy to use. This should be your first criteria in selecting a provider. Like merchant accounts, payment gateways are fee based. However, payment gateways usually use a flat fee structure. One familiar payment gateway provider is PayPal. However, there are many others that you are probably familiar with, such as Trust Commerce.

You want a payment gateway service provider to have great customer service and an intuitive interface. You have an advantage when it comes to payment gateways. If you are unsatisfied, switching to a new provider is fairly painless. This means that providers need to work to keep your business. To that end, it is common for payment gateways to provide extras, including billing services and fraud detection.

Tired of Shopping Around?

This can be a daunting task. If you are investing too much time in this, consider an out-of-the-box solution that covers both a payment gateway and a merchant account. It will cost more, but in the end might be a better investment. Go with this if you are losing time that you should be dedicating to the purpose of your business.

PayPal is the most well-known dual provider. However, Google Wallet and Amazon Payments also have a significant market share. Of course, Google Wallet is limited to digital items. Smaller companies such as Dwolla or Stripe are consumer focused. This may be the way to go as they are priced competitively and easier to use.

Go With Your Gut

Choose providers that provide you with a fee structure that fits your needs. Choose providers that you can trust with your customers' money and your bottom line. The service providers listed in this blog are all reputable, and you aren't likely to be defrauded on their watch. But, things can go wrong. You need to pick a provider you can trust if that happens. Point-of-Sale is how you get paid. Pay attention to that.

P.S. One shouldn't forget about good and reliable hosting :)