Credit cards are simply the accepted method of payment online. Shoppers know, understand and expect it. So if you want to do any type of business online, here are 5 of the popular and trusted methods for website credit card processing.
A relative newcomer that’s taking the credit card processing scene by storm. It began as a project to solve the challenge of taking payments online from a developer’s perspective. For the average business owner, Stripe can be a little technical to implement you may require a developer to help. Simply because it’s not created to be a point and click solution that anybody can set up.
Stripe was really built for developers to integrate into their systems, apps and services. As a result, it’s quite likely that you can find a WordPress plugin or shopping cart that supports Stripe. The nice thing about Stripe – if implemented properly, it’s almost a joy for customers to check out with.
Fees start at 2.9% + 30¢ for each transaction. Comparable to PayPal which we will discuss next.
Love or hate them, PayPal is a force to reckon with in this arena. They have the brand recognition, the years of experience under their belt. Because of all that, you’ll also find plenty of ready-made solutions to plug into your website or shopping cart so you can get started right away.
We’ve used them since 2004 and never had significant issues that we can’t resolve quickly. Their offerings can be a little confusing with you’re new to this. However, a simple PayPal Payments Standard account will go a long way to get started.
Works a lot like PayPal. They too have been around for a long time and while aren’t as visible, remain a solid option. Their rates also start at 2.9% + 30¢ per transaction. Definitely a solid contender.Up to now, the options we talked about are all third party. That means you don’t actually have a merchant account. Stripe, PayPal, 2Checkout processes those payments on your behalf. This also often means the security and compliance stuff is handled for you.
The other facet of website credit card processing is a direct merchant account. This is no different than a local business merchant account although you may have to go through a different, more stringent approval process and pay a little more. The nice thing about having your own merchant account is, your money is transferred into your bank account faster. Usually the next day.
Some say it costs less to have your own merchant account. That may be so but I’ve found it costs more especially if you don’t process enough. That’s because most merchant accounts have a minimum each month and if you don’t meet that, you pay a service fee. There are also more fees like statement fees and annual account fees on top of per transaction fees.
Not only that, since we are talking about website credit card processing, you need an intermediate service to make your merchant account work online. This is called a payment gateway. In your research, you might have come across something called Authorize.net. That’s a payment gateway.
Without getting too technical, let’s just say gateways are the people who connect your payment processor (where you opened your merchant account) and the customer’s credit card/bank. There is a monthly fee to use this and there’s no way around that.
Now that we have that basic knowledge, where do you get started if you want to go this route? By opening a merchant account.
PowerPay is a payment processor who understand the unique nature of doing business online. Also, when you open a merchant account, some processors require a setup fee and are picky who they approve. PowerPay lets you set up a merchant account for free and have a high approval rate.
Finally, you can open a merchant account with your bank. If you already do business on a local basis, this may seem like a logical choice. However, keep this in mind. Your bank may charge you more so shop around to lower your fees. Also, many local banks are not very experienced dealing with online business. If you happen to ride some viral wave and suddenly process a lot of payments in a short amount of time, this could trigger warning bells for them and they could withhold your money.
Not a great place to be which is why having a merchant account like PowerPay can be quite helpful.
Which way should you go?
If it were my business, I’d go with a third party system. Especially so if you’re starting out. I’d also probably do two – PayPal with Stripe or PayPal with 2Checkout. Simply because some people prefer using PayPal and some people avoid it like the plague. Until there’s a great need to have your own merchant account, third party website credit card processing options would be my choice.