Adding Website Credit Card Processing

The pandemic has caused more and more people to shift their purchases to online platforms. If your website is not set up to accept credit card payments, it is likely that your potential customers will find a similar merchant that will allow them to complete transactions safely from their home. There are two basic requirements of adding online processing to your website: A Merchant Account and a Payment Gateway. 

Merchant Account

A Merchant Account is a special type of bank account that allows businesses to accept credit cards. Payment processors such as Chosen Payments provide your business with a dedicated account. Companies like PayPal and Square are call aggregators and they lump all their clients into one single Merchant Account. Aggregators will typically accept almost any merchant, while a dedicated Merchant Account through a true credit card processor goes through an underwriting approval process. The main difference between the two is price. Aggregators assume much more risk and charge higher prices per transaction. Processors evaluate the risk of fraudulent transactions in your industry and on your specific website and assign rates based upon risk. You can save your business a lot of money by using a true credit card processor.

Payment Gateway

All businesses that accept credit cards must have a Merchant Account. Only online businesses require a payment gateway. The gateway is a software application that connects with your eCommerce selling platform and authorizes online payments. The gateway protects card data as it passes between your website and your payment processor. While some processors offer their own gateways, there are also third-party services such as Authorize.net that can be used on your website.

Compatibility

The most important part of selecting both a payment processor and a gateway is the compatibility with your eCommerce platform such as Shopify or Big Commerce. While most platforms will allow you to select your choice of processors and gateways, some industry specific software applications have exclusive arrangements with processors and gateways and don’t allow choices.

Recurring Payments

If you have a subscription or monthly service fee that is charged to customers each month, make sure you choose a processor that offers recurring billing as a service. Your customers will appreciate being billed automatically each month and as a merchant, monthly invoicing is one less thing you’ll have to worry about since it will be automated.

Pricing

While aggregators use a set fee for each transaction, the amount you are charged by a true credit card processor is based on many different factors that result in a savings for you. While PayPal charges a flat fee of 2.9% + .30 for online transactions, a processor might charge 1.9% for the same transactions. While a percentage point might not seem like a lot, if a merchant does 10 transactions of $1000 in a month with PayPal, the payment to PayPal would be $293. The same transactions would likely cost about $190 with Chosen Payments. There may also be an additional fee for a gateway from both an aggregator or a processor. The best type of pricing for merchants is known as Interchange Plus pricing. This is calculated as a small percentage of the total transaction amount, plus a small, fixed fee. The actual percentage is determined by the credit card brand (Visa, MasterCard etc.) while the payment processor sets the small, fixed fee. Percentages range between 1% and 3%, and the fixed fees range from $0.10 and $0.50.

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