How to accept credit card payments via the Internet

So you've finally decided to explore the revenue channel offered by the Internet. Accepting credit cards via the Internet has paved the way for merchants to increase their income. With more consumers shopping online, it's a profitable decision for businesses to provide credit card payment processing on their websites. The question would then be, where do you begin?

Here are the 3 major components of credit card processing:

Payment Gateway

A payment gateway manages the secure transfer of credit card funds of your customers from your website to your merchant account. This is done with a software interface provided by the payment gateway company that collects vital credit card data from the customer, and also informs the customer in real time if their credit card was approved or not. Payment gateway companies normally charge a transaction fee and a discount rate for this kind of service. Fees will vary from one processor to another, as well as features.

  • scalability (can they handle varying transaction volumes)
  • reliability (do their servers provide 99.9%
  • security (fraud prevention tools, Address Verification Service, 128-bit Secure Sockets Layer (SSL) technology, PCI compliance)

Without the proper security tools you are vulnerable to pilferers, and credit card scammers, and you don't want that happening on your site.

Merchant Account

A merchant account is an account with a bank that allows you to accept credit card payments. The payment gateway wires the billing information to the merchant account provider, and subsequently collects the funds from the customer's account.

Two kinds of merchant accounts:

  • 'card present' - retail and Point of Sale(POS) merchants

  • 'card not present' - Mail Order/Telephone Order (MOTO), and Internet Merchants.

An Internet Merchant Account enables credit card payments via the Internet. You can gain an Internet merchant account in three ways:

  • Through a reputable bank
  • Broker or intermediary
  • Third party processor

Most banks are not too keen on accepting start up businesses, and their ecommerce services are still at the developing stage. Getting a merchant account through a bank not only depends on how large your business is, but also on the nature of your business. Businesses in the field of pharmacy, gambling, adult entertainment, and travel usually won't even dare knock on the doors of banks for it's just a waste of time.

Brokers, on the other hand, can help you obtain a merchant account by acting as your representative to the bank. They make your business more appealing, and improve your chances of getting your own merchant account. However, like banks, they steer clear of high risk merchants, and you might have to produce documents (business plans, personal net worth, mortgage and credit card bills) to prove your business worth.

Still unsuccessful with the first two options, most merchants are more than willing to get a free merchant account via third party processor. Application is simple and most third party processors will waive application/set up fees, and provide value-added services for free. Most processors have a "sell nothing, pay nothing" policy, and caters to most high risk merchants turned down by banks and brokers. Account approval is quick, and you can start selling in less than 24 hours. However, third party processors can charge slightly higher on transactions unlike having your own Internet merchant account.


Without a functional website, you won't be able to sell your products and services on the Internet. Merchant account providers sometimes offer site templates to choose from, and payment gateways offer shopping carts that are seamlessly incorporated on your site. The key words here are: easily integrated. If you can't integrate, you can't sell.

In general, these three are the main factors when accepting credit card payments over the Internet. Having these three won't guarantee a successful online business, but are imperative if you plan on engaging in ecommerce. Search the web for the best solution you feel can help your business succeed. Merchants have long tapped the revenue potential of the ecommerce market, its about time you do.

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