Accepting credit card payment in web-site is now within your reach,
provided you complete a few formalities. The major requirements
are a Merchant Account and Payment Gateway service, besides upgrading
your web-site with shopping cart.
Your website needs to be augmented before you think of accepting
credit card payment. The very first requirement is a software called
Shopping Cart. Like a real life shopping cart in a mall, this software
collects information on every intended purchase, calculates total
amount payable and allows customer to add new items or drop collected
items from shopping basket.
You need to install a shopping cart software in your web-site and
tone-up your product offering pages accordingly.
You need a merchant account before accepting credit card payment.
A merchant account is an industry term for a banking relationship
or a special account through which you and a bank have arranged
to accept credit card payments. This is essential for all businesses
who wish to accept credit card payment - on-line as well as brick-and-mortar
shop in the market.
You will need to apply to a bank that accepts merchant account.
Normally, it takes some time and paperwork to obtain Merchant Account.
Banks are selective while opening new merchant account and sometimes
even reluctant to accept businesses that hadn't been in operation
for at least two years.
However, there are special merchant services that can help you set-up
an account immediately - we shall discuss about that later.
The next step is to set-up Payment Gateway that will act between
your customer and bank.
When you pay for something with a credit card in a brick-and-mortar
store, they swipe your card in a machine that is hooked to a network
with the credit card companies where the transaction is automatically
executed. So, the swiper acts as intermediary between your customer
Payment gateway is a software that acts as an intermediary between
your website shopping cart and all the financial networks involved
with the transaction, including customer's credit card issuing bank
and your merchant account.
The shopping cart forwards customer credit card information to the
payment gateway through a secure and encrypted connection. The payment
gateway then obtains authorization for payment from the credit card
associations (the customer's card issuing bank) and handles the
transfer of funds into your merchant account. Because of this, you
must have a merchant account from a bank that is on the same network
as your payment gateway.
Payment gateways also check for validity, encrypt transaction details,
verify that the details are sent to the correct destination, and
then decrypt the responses, which are finally sent back to the shopping
cart on your e-commerce site.
In addition, payment gateways have fraud detection engine that looks
for abnormality in a transaction (e.g. billing address mismatch)
and warns the Merchant about it.
If you have already purchased storefront software, or a shopping
cart package, make sure the payment gateway service is compatible
with the solution. Conversely, if you have not yet selected a shopping
cart, but have selected a payment gateway service, get a list of
supported shopping cart or e-commerce applications from the payment
gateway service provider.
Is there a Simple Solution ?
The requirement list above looks somewhat daunting and some of you
may have started wondering if its possible to fulfill it.
The requirement list is real - however there are now many service
providers who can help you resolve many of these issues.
For example, you may avoid 'Merchant Account' in the beginning and
ask service provider to collect payment on your behalf. There are
payment gateway service providers who help in other areas (e.g.
shopping cart) also.
We shall discuss these options in next issue.
Happy and Productive Surfing
Dr. Amit K Chatterjee
- Newsletter on Business Opportunties from India and Abroad
Vol: 4, Issue 28
; March 18' 2004
|Author : Dr.
Amit K. Chatterjee
(Amit worked in blue-chip Indian and MNCs for 15 years in various
capacities like Research and Information Analysis, Market Development,
MIS, R&D Information Systems etc. before starting his e-commerce
venture in 1997. The views expressed in this columns are of
his own. He may be reached at firstname.lastname@example.org