Merchant Accounts: Accepting Payments on Your Ecommerce Site

You’ve finally pulled the trigger and ordered an ecommerce store. You’ve chosen the products to sell, your domain name, and your design scheme. After building the site of your dreams, you realize you’re missing the one vital element that motivated you to start this whole project in the first place.

A way to get paid.

A storefront can help you attract customers by helping you display products and gather payment information, but without a means to allocate that payment in an account, it is limited to just that.

Merchants have three major options for accepting payments online:

  • linking your site to a payment service like PayPal or Google Checkout,
  • setting up a payment gateway and a merchant account,
  • or offering both.

 

Linking your site to Paypal or Google Checkout

PROS: Can be set up in less than one day, no setup cost, no monthly fee

CONS: Takes transaction off site, order information either doesn’t feed into your Volusion admin area at all or may have issues updating in real time.

BOTTOM LINE: Linking to PayPal or Google Checkout is cheap and easy, but taking all your transactions off your site can cost sales and prevent you from maximizing the benefits of our software.

If you are just getting started in ecommerce, the overhead cost of setting up a gateway and a merchant account can be cost prohibitive. Rather than abandoning ecommerce all together, linking a site to PayPal or Google Checkout allows you to collect payment without any initial or monthly fees.

PayPal and Google Checkout do not charge a setup or a monthly fee to accept payments online. Currently, Google Checkout does not charge transaction fees until 2008. If margins are slim for your site or if you don’t take too many orders each month, this is a very attractive offer.

When a customer places an order on your site using a payment processor like PayPal or Google Checkout, the transaction is temporarily taken off your site. A customer then inputs their billing, shipping and credit card information on PayPal or Google Checkout’s site, and then the customer is taken back to your store. This can take some time and doesn’t quite have the professional look that can be achieved by using our one-page checkout.

Volusion has a basic integration with PayPal’s site, so any orders placed using PayPal do feed into your Volusion admin area. However, if any information they input is different than it is in their account, such as their email address, the payment status will not be updated in your Volusion admin area. If you have questions about this integration, please see this article on PayPal.

Google Checkout integrates in a similar fashion. Version 5 of our software is more integrated with Google Checkout than Version 4 was, so be sure to check out this article on setting up your store with Google Checkout.
**NOTE: PayPal offers another service called Website Payments Pro, which will allow customers to complete a transaction on your own site. It is an extra $20 a month.

 

Setting up a payment gateway and merchant account

PROS: Allows customer to complete transaction on your site, order information is updated real time in your Volusion admin panel.

CONS: Requires monthly fee, could require setup fee

BOTTOM LINE: Although the overall costs of setting up a gateway and a merchant account can cut into profits, the legitimacy of accepting transactions directly on your site should make it well worth the expense.

Most ecommerce software providers do not include an account for collecting payment in their services. This is because merchants have different needs for their gateways and merchant accounts, and should be able to choose the best one to suit these needs. Is a virtual terminal necessary? Is a lower rate the deciding factor? Or is better fraud protection worth the extra expense? These are all factors in choosing a gateway and merchant account.

If ecommerce software alone does not allow you to collect the spoils of your labor, how can you accept payments on your site? Here is a breakdown of how funds exchange hands through the web.

 

How an online credit card transaction works

  • The customer inputs credit or debit card info on an ecommerce site.
  • This credit card information is encrypted by a Secured Socket Layer (SSL) to prevent interception and is sent to a payment gateway. Many merchant accounts require that you have an SSL, but this SSL do not come standard with your ecommerce solution or your gateway. If you are indeed choosing to host with Volusion, you can purchase a Volusion SSL.
  • A payment gateway verifies that the card information is correct, and that the funds are indeed in the account. After quickly verifying that the order is okay, the funds can be transferred through another SSL and appropriated into a merchant account.
  • The merchant account will periodically transfer funds into your bank account. Some merchant accounts perform this transfer more frequently than others, so it is good to know how often this will be done before you sign up.

Since the merchant account does not directly integrate with your Volusion site, you can use any merchant account you prefer, provided that they integrate with one of our supported gateways. We recommend using Volusion Merchant Services, since it is the most likely to be integrated with your store at all times. This service includes both your payment gateway and your merchant account. If you choose not to go with Volusion Merchant Services, here is a list of over 35 Volusion Supported Gateways.

 

Factors in choosing a gateway

Although rate is certainly the most obvious factor in choosing a gateway, other factors should come into play when choosing which one is the right one for you.

1. FUNCTIONALITY AND CONVENIENCE: Some merchants need just the basics in a payment gateway. Others want extra functionality such as recurring payments, a virtual terminal, and the ability to process eChecks. Also, some gateways integrate better with your Volusion site, allowing you to authorize, capture, credit, and void funds straight from your admin panel. Using Volusion Merchant Services will allow you to perform all of these functions from your admin area. This Volusion Supported Gateway chart explains how well other gateways will integrate with your online store as well.

2. SECURITY: Many payment gateways offer filters to better detect fraudulent orders. There are even gateways whose employees monitor transactions in search of fraudulent activity. If you are in an industry like electronics or any youth-oriented field, these provisions may be worth the expense. If a fraudulent order goes through, you could be charged by both your merchant account provider and the fraud victim’s credit card company for letting the transaction go through. These fees can add up, and the process of fighting chargebacks can be very time consuming.

3. RELIABILITY AND REPUTATION: A gateway transaction should take about three to four seconds. If a customer cannot complete their transaction efficiently on your site, the chances of them going to a competitor are much greater.

4. COST: A gateway with better security, support and reputation does not come without an expense. Some larger gateways like Authorize.net are so big, they can offer many of these services for less money, but even they charge extra for better fraud protection.

 

Factors in choosing a merchant account

A merchant account must integrate with a Volusion supported gateway in order to use it with a Volusion site. Here are some other factors to consider:

1. CUSTOMER SERVICE: Some people prefer to deal with a brick and mortar bank for their merchant account. Some merchants are fine with decent phone support. Bear in mind though, many brick and mortar banks consider online business risky, so they typically charge higher setup fees than online payment processors.

2. RATES: This factor seems obvious, but there are potential startup fees, monthly statement fees, minimum fees, batch fees, transaction fees, and possible chargeback fees. Make sure you know any charges associated with your merchant account upfront. Also, be sure to note if there is a long-term contract involved.

 

Our recommendation

We know that scouring the web looking for merchant accounts is a daunting task, so we came up with a payment gateway/merchant account service that offers both low rates and 24/7 support. Volusion’s online payment gateway and merchant account will also integrate 100% with your Volusion store.

One Response to “Merchant Accounts: Accepting Payments on Your Ecommerce Site”

  1. Ray

    Great article, really spells out how the process works. The Volusion team has been a great help so far.

    RW
    http://www.thegiftofgolf.ca

    Reply

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