Online Payment Processing for Starters

For an e-commerce startup, the most mysterious piece of the puzzle is probably online payment processing. Even though we don’t exactly know what goes on behind the scene, we are familiar with credit card machines that are used all the time in retail stores. You swipe your card and if your purchase is within your account limit it is charged to your account. And somehow the money you are charged goes into the vendors bank account. This is a little easier to grasp than an online payment transaction where there is no credit card swiping machine and where the seller and buyer don’t really see each other. As a matter of fact, there isn’t really much difference between an online and in person transaction.

The standard credit card processing system is based on a merchant accounts which enable electronic authorization, capture and deposit of credit card payments. These merchant accounts are provided by companies or banks such as North American Bancard, which have processing relationships with card issuers. They come with different fees. Make sure that you carefully review all the terms before signing an agreement with any merchant account provider. You should shop around and make sure that you understand all the charges that are involved. Disputes between merchants and providers of merchant account services usually originate from unforseen charges and fine print.

Merchant accounts let you accept payments both in person and online. When the transaction is in person you can use a credit card terminal, the devices we see at retailers. When you are selling online, you need an interface between your web store and your merchant account. Authorize.Net is a very widely used online payment gateway and creates the bridge between your web store and your merchant account. This piece of the online payment puzzle may sometimes be bundled within the package you get from the merchant account provider.

Besides a standard credit card processing mechanism, there are some other payment processing services you can find online. They come in different flavors. As an e-commerce business owner you have the choice of using anyone you like. Your decision may depend on the cost of the service, how they work or their popularity among your customers. You can use multiple payment processing options as well, which is something I suggest by the way, to cover varying customer preferences.

One of the popular payment processing alternatives is PayPal, which offers a variety of ways to do business online. From integrated merchant accounts and payment gateway services to online invoicing and mass payments, PayPal comes with  different options for integration with your e-commerce website.

Along side a bunch of web-based services and products, Google has an online payment processing service that is called Google Checkout. Although it has become available long after many online payment services, the size of the customer base that owns Google Checkout accounts is very significant. This makes Google Checkout a critical component among checkout alternatives of your online storefront.

Obviously, we wouldn’t expect anything less from the e-commerce giant. Amazon.com also has online payment processing solutions for online businesses, namely Amazon Simple Pay and Checkout by Amazon. These payment options will make it easy for millions of Amazon customers to purchase from your online store. With these payment alternatives your online business will experience higher conversion since Amazon.com customers will be purchasing through a system which they already know and trust.

The list doesn’t end here. Feel free to let me know any other online payment processing tools you know. Your experience with these will definitely be helpful.

Having plenty of options requires making some research on your own to identify the online payment solutions that fit your situation, your budget or your customer population. If you haven’t yet decided on the online storefront software you will use, your online payment processing choice may help you in filtering the shopping cart applications. See if they support the payment processing alternatives you have in mind so you can easily configure your checkout system using the out-of-the-box capabilities available from your shopping cart software.