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Solutions For Online Payment Processing

Aug 26, 2007
If you are about to launch an online business, but do not know how to accept payments online, then this article is for you. There are several ways to process transactions over the internet. We will look at all of the options available to you so you can select one that will work well for your business.

The most common method used by online merchants to process payments is to have a third party, such as Paypal or 2Checkout, do it for them. All you need to do is sign up for an online merchant account with the third-party, and then you link to their order form from your website and they process the payments for you.

The processor charges a transaction fee for each transaction, ranging anywhere from 2% - 15%, depending on the company and the amount of business you transact. Most of these companies can process recurring payments as well (recurring payment processing is necessary if your site sells memberships for which you need to charge your customers on a regular basis).

Some of these third-party processors also have the ability to process your orders using an automated phone order system. With this method, your customers can call a certain phone number to place an order, and are then prompted to enter a numerical code. The order is subsequently charged to the telephone bill of the customer.

Also, some third-party merchants offer an online check payment option (2Checkout offers this, as does PayByCheck). This gives your customers the ability to pay for their order by entering the account number and routing number of their checking account on the order form, and then their checking account is automatically debited. It is important to offer the pay-by-check alternative to your customers, because not everyone has a credit card. Offering online check payment processing will help you convert more sales.

If you do not want to use an outside company to process your payments for you, then you will need to open your own merchant account. This is far from easy. If you open a merchant account at a bank, there might be a monthly service fee of several hundred dollars per month.

There are several companies, such as CardService International, that offer cheap online merchant accounts, ranging from $50 - $100 per month. After you open the merchant account, you will need to hire an experienced programmer to create an order form with a payment processing gateway that links to your merchant account.

I hope this information will help pick the most appropriate way to accept money from your customers over the internet. If you decide to use a third-party payment processor, just make sure that they have a good service record, because if their systems are frequently down or their order forms do not work well, you will lose potential sales. If you are launching a multi-million dollar business, then you should probably set up your own merchant account and have an experienced programmer create an order form and a payment processing gateway to process your payments.
About the Author
Jim Pretin is the owner of http://www.forms4free.com, a service that helps programmers make a free HTML form.
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