Accepting Credit Cards
80% of the world buys products and services on credit.
Over 87% of all Internet customers use credit cards and businesses lose sales over 60% of the time if they don't accept credit card payment !
The ability to accept credit cards WILL DETERMINE the level of your company's online success.
Why Do It?
Credit card payments allow you to take advantage of the following types of customers:
1. Impulse buyers. After reading your advertisements and hype on your site, buyers would be all fired up about your product. If they have a means of making a purchase immediately, you've secured that sale. If you only allow check payments, the additional time it takes for them to get their check book and mail out the check may be a deterrence. They may also have second thoughts later.
2. International customers. Credit card payment is a tremendous convenience if your customers are overseas. It automatically takes care of the problems of currency differences as well as the time it takes for a check to travel to the vendor. You will lose a large number of overseas customers if check payment is the only way you can accept payment.
Methods of Accepting Credit Card Payments
There are actually two ways in which you can accept credit cards on your site.
1. Using Your Own Merchant Account. To do this, you will need a bank that will allow you to open a merchant account.
2. Through a Third Party Merchant. There are numerous companies around will are willing to accept credit cards payments on your behalf in exchange for various fees and percentages.
Which Method Should You Use?
The initial costs of opening your own merchant account is usually higher than when you use a third party merchant. Indeed, some third party merchants have no setup fee at all.
However, the transaction fee (which is what you pay the bank or third party merchant for each sale) is higher when you use a third party as compared to when using your own merchant account.
A third party merchant is usually convenient to use when you don't know if you can actually make much out of your product or service. If you just want to test the water to see how things are, this is usually a good way to start. It is also convenient in that the merchant takes care of everything for you. You just get a check at the end of each payment period (if you earned enough) and concentrate on your products, services and customers.
Having your own merchant account accords your business with a certain amount of professionalism. And, as mentioned earlier, your transaction costs are usually much lower. However you have to be careful to minimize your credit card risks since you'll be processing the credit card payments yourself. This is not to say that there are no risks in using a third party merchant.