How To Accept Credit Cards Online

Your guide to this hub about accepting credit cards online... Neil Shearing

Accepting credit cards online is critical to any company wanting to successfully sell their own products online. Back in the early days of the Internet it was understood that accepting cards wasn't a good long term solution, because it was forcing a real world system onto the Web. Lots of businesses launched virtual currencies for example "flooz", but the web-based currencies didn't flourish. And so, approximately 10 years on from the people starting to sell on the web, we are all still using credit cards to make online purchases and accepting credit cards as payment for products online is still as important as ever.

There are basically two ways to accept credit cards online. A business can either apply for their own merchant account, which allows the business to process credit cards in their own business name, or they can elect to use the services of a third party service provider, who does the actual credit card processing on behalf of the business selling the products. Getting a merchant account has higher upfront costs, but has smaller per item fees. Using a third party processor costs less initially, but has higher per transaction fees.

Deciding whether or not to get a full merchant account or use a third party processor is simply a question of running the numbers. Consider these different business types...

In the main, merchants who are actively trading offline and simply want to expand online will most likely be suited to getting their own credit card processing account. Most likely, they will already have an offline merchant account and will expand the remit of that account to also do "MOTO", which is "Mail Order Telephone Order" processing and simply means that the cardholder is not present at the point of sale.

For micro businesses starting out online selling new software or a new ebook, it's important that they consider testing their market using a third party payment service. The advantage to the new business is that there's very little upfront cost so they can test their market cheaply and easily. If the market is profitable, they can eventually look to decrease the per-sale fees by applying for their own merchant account. If sales are poor, they can quickly exit the market without having expended much capital to get their own credit card processing account.