How to Accept Payments Online

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Now that you've got your website up and running and your products and services selected, it's time to think about how your customers will pay you. While accepting cash and checks in person at a brick-and-mortar location is an option when dealing with customers face-to-face, they aren't options online. You have three choices: merchant accounts, third-party payment processors and wholesalers.

Merchant Accounts

Accept credit cards and boost online sales with a merchant account; set it up with your business' bank, or choose a new bank. Complete the application. You will have to describe your products and their cost, select the appropriate industry, detail the percentage of your sales which takes place online and off, and the average amount per sale. Your credit will be checked, and you may need to provide one or more business references. Pay the application fee.

Install a gateway processor. The gateway securely sends the encrypted customer credit card information from your website to the bank. The bank accepts or declines payment, and deposits the amount into your account. Exactly how you install the gateway processor depends on the processor you select, your web host and your computer.

Pay the fees. There will be a per-transaction fee, a monthly minimum fee and a percentage fee based on the dollar volume. These fees are deducted from your payments.

Third-Party Processors

Select a third-party processor to accept payments on your behalf if you don't want, or can't qualify for, a merchant account. These processors include Paypal Google Checkout and Money Brokers. A variation is used for a service called Square.com, which uses a smart phone and card reader. A customers pays the third party using a link from your site. Or, in the case of Square, she inputs her information into a form at your site. You then take that information and process the transaction through the smart phone and Square technology. The money is taken out of the customer's account and deposited into yours. The customer may decide to pay with her credit card; but she's paying the third party, not you, directly.

Complete the online application, which is relatively simple. Provide your business name, contact name, physical address and telephone number. Provide a credit card number and a bank account if you want the third party to electronically transfer funds to your bank account.

Pay the fees. Each transaction will generate a fee depending on your volume of sales. There may be a transaction charge and a percentage fee. There could be additional fees if you add in extra services. These fees are deducted from your account.

Wholesalers

Accept payment through a third-party wholesaler. This works for downloadable products like e-books, scripts or software and tangible products. The third party is paid by the customer. He is then directed to your "Thank You" page, where he downloads the product. Or, in the case of tangible products you ship the product to the customer. Technically you're not selling directly to the customer, but to the wholesaler, who then sells to the customer. Clickbank, Amazon and sites like Etsy are examples of third-party wholesalers.

Complete the application and pay the account setup fee.

Set up the required website pages. Exactly what you set up depends on what the third-party wholesaler requires. Clickbank, for example, requires a sales page and a "Thank You" page.

Pay the fees associated with the wholesaler. These vary considerably. It may be a straight percentage, an annual membership fee plus percentage, or a per-transaction fee plus a percentage of the sales amount.

Tips & Warnings

  • Take your time filling out any applications. Don't guess at the information, especially for a merchant account.
  • Your credit report will be requested and considered in the approval process for a merchant account. Before applying go over your report to remove any inaccuracies.
  • Third-party processors are not banks. They can and do refuse to make payments based on their terms of service. Read the TOS and make sure you completely understand them. You may decide to remove any cash in your account on a daily basis.

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