Forest Software

Web, SEO and IT & Business Advice for the Smaller Business

Last updated on April 13th, 2015 at 01:39 pm

You know that you have the right product or service for selling on-line but do not know how to go about it.

It can be hard to work out how to get started with e-commerce and you may want to talk to a specialist accountant such as Daverns, based in Watford who have a lot of experience in dealing with online retailers.

money-in-the-handTo accept credit cards through your Web site, you need to have the three elements listed below in place:

  • You need a form of some sort on your site that customers can use to place their orders. This range from a simple ‘I want x of your product and this is my card details” through to a full blown shopping cart with an underlaying database.
  • You need to have a credit card merchant account or another method of taking credit card details (PayPal for example)
  • Depending on the way you take cards you may also need payment-processing software to serve as the link between your site and the bank.



Order form

A form that takes orders online need be no different than any other form. You set up the form using HTML, and set it to use a script of some sort (CGI, PHP, ASP for example) to do the following:

Pass the credit card info to the payment-processing software, which sends the transaction to the bank (or if you are using someone like Paypal or Amazon to process your payments you may send them the basic details and allow them to take card details and handle the financial side of the transaction).

Send an email to whoever fulfills the orders, with the order information and customer mailing address if appropriate.

Create a confirmation page for the customer. This page should not only thank them for their order, but provide them with a phone number and/or email address to contact in case of problems with the order, and perhaps an order number for their records.

 There are several systems you can use to make your ordering page secure, but the most popular is Secure Sockets Layer (SSL), which is supported by all major browsers, and by most ISPs. Using a secure Web protocol such as SSL has two main goals:

It encrypts the credit card data being transmitted, so that it would be very difficult (if not impossible) for a third party to decipher.

Certify that the message is in fact coming from where it claims to be coming from, so that it would be very difficult for a third party to forge a transaction. This is done by means of a digital certificate.

 Notice that I say “very difficult,” not “impossible.” No matter how strong an encryption system you use, it is theoretically possible for someone to “crack” it, given enough expertise and computing power. The idea is not to make your messages as secure as humanly possible, but simply to make it secure enough that the potential ill-gotten gains from cracking your system wouldn’t be worth the time and money involved in doing so. Experts agree that popular secure protocols like SSL are more than adequate to achieve this goal.

SSL-secured page URLs begin with https:// instead of http://, and most browsers automatically indicate to the user whether a page is secure or not. However, it never hurts to remind your visitors that their credit card information is protected by SSL. If you’d like to learn more about Internet security, there is a lot of information about this subject on the net.

Credit Card Merchant Accounts

Banks are famous for making their cost structures complicated, so that you can’t easily compare costs among different banks, and merchant accounts are no exception. As with normal credit card transactions in retail outlets, banks charge a percentage of each transaction, called a discount rate, and a fixed per-transaction fee. There is often a fixed monthly fee, a monthly minimum order, and a one-time set-up fee as well. A payment-processing system, whether hardware- or software-based, is an additional expense, as we shall see.

Fees for merchant accounts are like interest rates on loans – they vary depending on the perceived level of risk to the bank. Users of credit cards may refuse to pay certain charges for a variety of reasons, ranging from returned products to honest errors to fraudulent charges. Banks want to encourage the view of credit cards as a safe and convenient way to buy, so they are generally pretty lenient about allowing buyers to make chargebacks, as they are called. The risk to the bank, of course, is that chargebacks may occur after the merchant has already been paid, and the bank could be left holding the bag.

Banks do several things to limit their exposure to chargeback risk. They may ask you to personally guarantee the account agreement, meaning that if your company ends up owing money to the bank, you will be personally liable. Naturally, companies in businesses that have a high rate of chargebacks, especially those selling high priced items, will pay higher fees. Banks may also hold back a certain percentage of your money every month as insurance against possible  future chargebacks. If you are deemed to be a high chargeback risk, it could be months before the customer’s money makes it through the system to your bank account.

Whatever you’re selling, an Internet-based store is automatically in a higher-cost category than a traditional merchant. In a traditional store, the customer’s card is “swiped” through a gadget that reads the data in the magnetic stripe, and transmits that data to the card issuer, which either authorizes or declines the transaction in a matter of seconds. The cardholder also enters a pin number here in the UK for most cards (although there are still one or two where the customer signs a receipt). Such “cardholder present” transactions present little risk to the bank, and thus earn the lowest merchant rates. Merchants doing transactions when the cardholder is not physically present, whether over the phone or online, will pay a higher rate. When you apply for a merchant account, the bank will ask you what percentage of your transactions are “cardholder not present” transactions, and offer you a rate based on that percentafe.

To sum up, these are the factors that banks use to determine how good a rate to offer you:

The percentage of “cardholder not present” transactions.

The political correctness of the products you’re selling.

The average amount per transaction.

Your projected monthly sales volume.

How long you’ve been in business, and what kind of credit rating you have.

The kinds of cards you want to accept. American Express charges higher fees than Visa and Mastercard for example.

 Payment Processing Software

If you’re doing business over the Web, you also need some software to process the payment, this can either be via a connection to Paypal (or some other similar organisation) or a payment-processing package.

Payment-processing software is usually sold as a service rather than a product. That is, you don’t install it on your Web server and run it yourself, you simply pass credit card data to the software company’s server, and they take it from there. Most companies allow you to “buy” the software or to “rent” it for a monthly fee and for most businesses, the monthly rental fee would seem to be the better deal. The company might go belly-up, or they may introduce a new version of the software and require you to buy it all over again.

However complex payment processing may be, it should be fairly transparent to the site owner. All you should need to do is to incorporate the appropriate code into your order form. One decision you need to make is whether or not you need real-time authorization. If you are selling something that’s delivered online, for example online content that requires paid registration, or software that is distributed by download, then you’ll need immediate authorisation, for customers will want to receive what they’ve paid for right now.

About this blog

Over the years we have published many articles based around the questions that we get asked from small businesses relating to marketing, SEO, general business advice and other subjects.  You can find a list of related articles grouped by subject below or can even search for a word or phrase or browse our recent articles.

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Other sites of interest

The Crafty Kitten, a local craft and gift shop.

Welsh Dragons made from polymer clay.

UK Business Services directory.

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