Payment Options for Export Import Trade Part VIII - How to Augment Your Website for Credit Card Transaction

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.

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.

Merchant Account

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.

Payment Gateway

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 and bank.

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

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Source: FAIDA - 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 )

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