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Is Your Website Credit Card Friendly?

In my last column I discussed the process of credit card enabling your brick-and-mortar business. I pointed out that research has shown that accepting credit cards can help increase revenue and enhance cash flow. I also pointed out that you may have to look beyond your local bank for help in getting things set up. This week we will look at setting up an online payment system for your business website. If you think hooking up a brick-and-mortar location with a credit card system stymies most bankers, try asking them how to do it on your website.

If you’ll recall, the question that spurred this topic came from a lady who went to her local bank for help in setting up a credit card acceptance system for her business and her banker wasn’t very knowledgeable on the subject. I pointed out that her banker’s ignorance of the subject probably wasn’t a reflection on his skills as a banker, but a reflection on the compartmentalization of the credit card aspect of banking.

The fact is, most banks can provide you with the merchant account needed to accept credit card payments, but beyond that have little to do with the process. Even larger banks may only have a single person on staff who is tasked as the “credit card expert” and if that person ever goes on vacation, you’re pretty much out of luck (voice of experience talking here, folks).

I have helped many clients set up online credit card processing systems and more than once I’ve had to sit down with the bank issuing the merchant account and educate them on how online payment systems work. Don’t believe me? This is a direct quote (here’s the Bible, here’s my hand) from the bank employee who was in charge of processing internet merchant account applications, “When someone pays online how do they swipe the credit card in their computer…”

Much like a brick and mortar credit card processing system, you will need the following to accept credit cards on your website:

(1) an electronic shopping cart system that allows the customer to select products and checkout when ready;

(2) a payment gateway service to get approval or declination of the credit card;

(3) a credit card processor who will process the transaction; and

(4) an internet merchant account issued by an acquiring bank in which processed funds are deposited.

We covered most of these elements last week. Here’s a quick refresher for those who missed the basics, then we’ll talk about a shopping cart system.

Payment Gateway Service: The payment gateway service comes into play when a customer submits their credit card information to the webpage form. Think of the gateway service as the middleman in the process. The website’s shopping cart checkout system electronically submits the credit card to the gateway service who then routes the information to the processor for approval. Depending on the reply from the processor, the gateway service will return an approval or declination for the purchase. This entire process takes just seconds to perform.

Credit Card Processor: The credit card processor is an electronic data center that processes the credit card transactions coming from the gateway company, ensures that the charge is valid, then settles the funds in your merchant account.

Internet Merchant Account: An Internet merchant account is a bank or financial institution account in which funds from online sales are deposited. Merchant accounts are usually issued by banks who are associated with the major credit card services like Visa and MasterCard. Be aware that many banks will not grant merchant accounts to Internet merchants as they are often categorized as “high risk ventures.” This policy varies widely and in the end, the granting of the merchant account will come down to economics from the bank’s point of view. If the bank sees even the smallest iota of risk, you will not be granted the account. Fortunately, the growth of online sales has given rise to an entire industry of merchant service bureaus that will grant you a merchant account and everything else you need to accept online payments. The fees are usually higher, but it’s better than not having an online payment system at all.

Shopping Cart System. To accept online payments you must have what’s called a “shopping cart system” that allows your customer to choose and purchase products. Adding a shopping cart system to your website can be simple or complex, cheap or very expensive. It depends on the product you’re selling and the options you wish to offer your customers. As in everything, you get what you pay for.

A shopping cart system typically consists of three components: a product catalog, the shopping cart, and a checkout/payment system. The product catalog is your inventory component and displays the items you have for sale on the website. The checkout/payment system is the part of the program that allows your customers to “add this to my cart,” and the checkout/ payment system is the component that allows the customer to checkout and pay for their purchase.

There is a wide variety of shopping cart software on the market and the price is dependent on the features you want. Shopping cart systems range from simple HTML form insertions to full- blown catalog and inventory systems like those used by Amazon or Dell.

You can spend from zero to tens of thousands of dollars. Some of them you can set up on your site yourself while others should be set up by someone who knows what they’re doing.

You can get a free shopping cart system which is the most simplistic in nature, but the easiest to implement. Using Paypal also alleviates the need for a bank merchant account because everything is handled by Paypal, for a fee of course. You insert HTML forms into your website code and when an item is purchased.

There are also numerous online companies who will assist in the setup of your ecommerce / credit card system. These companies charge several hundred to several thousand dollars for their services, so it would be wise for you to have an idea of exactly what you need before calling them into play.

Customer submits credit card. The site sends the transaction to the gateway. The gateway sends the info to the processor. The processor contacts the issuing bank of the customers credit card. The issuing bank returns the result of the processor. The processor routs the result to the gate. The gateway passes the result to the website. The website displays the result.

One thing to remember when setting up an ecommerce system on your site is this: online it’s all about security and privacy. Though online credit card processing has been around for years there are still many people who are uncomfortable giving their credit card number online. These are the same folks that do not hesitate to give their credit card number over the phone to a complete stranger or hand their credit card to a waiter who disappears with it for ten minutes. Online credit card processing is much less susceptible to fraud and abuse than either telephone processing or giving it to a waiter.

Eighty-five percent of internet users surveys said that a lack of security made them uncomfortable sending credit card information over the Web.

It’s up to you to instill a sense of security and make the customer comfortable shoving their card into their computer.

Here’s to your success.

Web Hosting Strategy for Managing Multiple Websites

If you are making a comfortable living from the Internet and the Web or have a plan to achieve that goal, it’s likely that you are running more than ten websites. The websites are your virtual offices. You want to your sites to be up and running 365 days, 7 days a week and 24 hours a day. Managing multiple websites is a daunting task if running one website is a hobby.

Proposed Hosting Strategy for Managing Multiple Websites

The hosting strategy we propose is to host your multiple major websites with 3-4 different hosting companies, and open a reseller account with another hosting company for 1) small and new websites, 2) web development and 3) backup. Hosting with too many hosting companies will significantly increase the time and the difficulty of managing sites, and using a single hosting company isn’t a smart choice either.

Justification of the Hosting Strategy

Cost – Cost of the Web hosting isn’t an issue for running a single web site whether it costs $5 or $25 a month. The difference is only a few hundred dollars or less a year. It’s always nice and smart to get the most out of every single dollar in doing business. At least, a few hundred dollars difference wouldn’t make or break a business. If you run 10 or even 50 websites, the cost of Web hosting alone will define the success or failure of your online adventure. To cut the hosting cost, the option is to use a reseller hosting account to host as many small or new sites as you want for about $15 a month. You host one or 2 major websites with one hosting company. Shared hosting account costs under $10 a month, and dedicated server will cost $50 or more a month.

Uptime – If your bread-and-butter maker website is down for a few hours, you’ll lose hundreds of dollars and more. Even though most hosting companies promise 99.9% uptime, it’s not common to see a website down for a few hours. A site could be down for a half day or even more if a hosting company is doing a major update. The hosting company may do the update in a weekend or a major holiday, but that’s when many family-oriented and travel sites generate their revenues. If you could afford the loss of revenues, many websites owners can’t bear the psychological loss and pressure. Hosting your sites with a few hosting companies will reduce the risk of downtime.

Application Development – For simple web application, webmasters will do development on the same production hosting site. If your ecommerce applications are complex, doing development on the production site may bring down the live site especially if you’re in the process of changing configuration files or install customized applications. The option is setup a website on your reseller account for development and testing, and move the applications to production account on another server after the completion.

Backup – If you’re not happy with a hosting company, a hosting company is out of business, or the servers will be down for a day or two, you can easily temporarily or permanently switch from one hosting company to other since you’re familiar with the site managing tools already. If you have a backup or secondary copy running on another server, all you need for the switch is the transfer of the domain, which will take no more than a minute.

Shop Before You Buy

There’re too many hosting plans to choose from a large number of hosting companies – ASP Web Hosting, Budget Hosting, Dedicated Servers, eCommerce Hosting, FrontPage Web Hosting, Hosting With Templates ( ) , Managed Web Hosting, PHP Web Hosting, Reseller Hosting, Shared Hosting, Unix / Linux Hosting, Virtual Private Servers, Windows Hosting or Co-location Hosting. Compare the cost, hosting features, tracking records of hosting companies before making your commitment. Good luck with your online adventures.