Accepting Credit Cards Online with Third-party Merchant Accounts Published: Oct 28, 2003

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It's a jungle out there when you're trying to figure out how to accept payment over the web. We'll help give you the straight goods of accepting online payments.

It's a jungle out there when you're trying to figure out how to accept payment over the web. We'll help give you the straight goods of accepting online payments.

About Credit Cards
Credit cards are almost universal. Whether you’ sell memberships over your Website, widgets over the counter, or office supplies through a catalog, you should accept credit cards.

Accepting credit cards can enlarge your user base in two ways. Firstly, it lends credibility to your business, which is of the utmost importance if you want to close the sale. That credibility stems from the fact that people believe that you have to be a 'real' or reputable company in order to accept credit cards. And secondly, shoppers feel safer buying this way, as credit card companies only hold consumers liable for the first $50 if fraud occurs.

However, because of the nature of Internet transactions, there is no physical credit card present for you to swipe, nor is there a customer to sign for the purchase. This means that ecommerce purchases fall into a higher risk category known as Mail Order/Telephone Order (MOTO) transactions, or "Card Not Present" transactions. Due to the higher risk of these transactions compared to their in-store counterparts, fees are higher than purchase situations in which a card is present.

Third-Party Merchant Providers
One of the easiest and most popular ways to accepting online payments is by using a third-party merchant account. This is an ideal account for small to medium sized companies that wish to look larger by accepting credit cards without the need of having your own merchant bank account, instead you use the third-parties.

There are many third-party merchant providers around but the more well known companies are:
2CheckOut
Paypal

2CheckOut Overview
Cost: $50 one-time setup - $0.45 per Transaction and 5.5% of Transaction Amount
 
Provides online shopping cart and highly brandable ordering pages
Payments are sent every month by cheque
Slow support and customer service options such as a toll-free 1-800

Paysystems Overview
Cost: $50 one-time setup - $1.00 per Transaction and 3.95% of Transaction Amount OR $0.35 per Transaction and 5.5% of Transaction Amount

Provides online shopping cart and logo only brandable ordering pages
Payments are sent every week by cheque
Quick support and customer service options such as a toll-free 1-800 number and live chat

Paypal Overview
Cost: Free setup - Receive Funds: 2.2% + $0.30 USD to 2.9% + $0.30 USD

Provides online shopping cart and logo only brandable ordering pages
Payments must be transferred to your bank account
Low end support and customer service options, email support only