Credit card processing services are an important aspect of most businesses. And with many businesses moving some services or products online, understanding credit card processing is more important than ever. Even if you’re not a full-fledged, exclusively online-based merchant, you might still be able to increase profits with e-commerce solutions.
This guide will explain why and how your business can benefit from becoming an e-commerce merchant, and starting your journey toward being equipped for e-commerce credit card processing.
Even if you have a brick and mortar store, online credit card processing can benefit your business in a number of ways. The first and most immediate benefit is the opportunity to sell your products globally, bringing potential for an exponential increase in customers.
Affordable merchant account providers, many of which charge a monthly fee, allow you to set up a website and securely sell your products or services to a wider market. Whether you plan to expand within your city, county, state, country, or even globally, a website can help you do it. Once your site is designed, online shopping carts can be added to quickly and easily begin accepting online payments. Next, we’ll get into more detail as to how an e-commerce merchant account works.
To accept e-commerce payments online, integrated shopping carts on your website or mobile app connect to a virtual terminal. This allows customers to enter their payment information for ecommerce payment processing. The type of transaction that occurs is called a card-not-present transaction, as the customer is entering their card information manually rather than swiping or inserting their physical card.
For card-not-present transactions such as those involved in e-commerce, a special process is necessary in order for payments to be completed. For online transactions, the customer enters their billing information into a virtual terminal. Think of the virtual terminal as an online version of your in-store POS system. Anyone with an internet-connected web browser can find your website and use your virtual terminal to make a purchase though an e-commerce gateway.
Once a customer enters their billing info, the virtual terminal needs to communicate with a merchant account provider and payment processor service. This all occurs behind the scenes, in just a few seconds. Once a payment is confirmed and authorized, funds are debited from the customer’s account and transferred to a merchant account.
In addition to e-commerce transactions, you may have heard of m-commerce transactions as well. These are related, but ecommerce and m-commerce are two separate things. When it comes to accepting payments, the process is similar for m-commerce transactions as it is for e-commerce.
However, “M” refers to “mobile,” meaning transactions that occur specifically on mobile phones. Sometimes these a transactions are completed through a mobile web browser that allows customers to use their phone to visit your website. However, a mobile app is another way for customers to complete online purchases. If you have a payment gateway-enabled mobile app for your business, this gives your customers yet another way to buy.
As you might be able to imagine, a potential downside of providing both ecommerce and mcommerce payments is that they provide opportunities for criminals to defraud your business. Thankfully, however, you can keep the risk of this happening low by employing a few basic best practices. Next, we’ll briefly describe the risk and how to beat potential fraudsters at their own game.
Ecommerce businesses are considered to be higher-risk than exclusively brick and mortar stores. This is because of a few types of fraud that are commonly associated with card-not-present transactions. However, a few basic measures will help ensure you don’t fall victim to a fraud attempt.
Payment Card Industry Data Security Standard, or PCI DSS, refers to a set of systems and procedures that, if followed, ensure customers and merchants are protected from fraud associated with card-not-present transactions. All ecommerce merchants are required to be PCI compliant by adhering to the standard.
Some of the requirements of PCI DSS include maintaining a firewall to protect cardholder data, encrypting the transmission of billing information across networks, and regular testing of security processes. A yearly and quarterly assessment from your merchant account provider ensures that your systems remain PCI DSS compliant on an ongoing basis.
Because of the opportunities credit cards and remote payments provide to fraudsters, e-commerce businesses are considered “high-risk merchants” with regard to payment security. Oftentimes, this means you need to open a special type of merchant bank account that has special features meant to protect you, as the merchant, and your customers.
As a merchant, you can also look out for high-risk credit card transactions that might need to be flagged for fraud. Any credit card that is displaying unusual activity might be considered suspect. For example, if a customer puts their billing address as in China, and their shipping address as being in Florida, and then makes another purchase using a third address, this is considered unusual and would warrant a closer look.
Sometimes, by identifying high risk credit card customers, you can prevent fraud before it happens. Once you become an e-commerce merchant, diligence is key for protecting your business from fraudulent activity.
Transitioning to becoming an e-commerce business is the single best way to reach more customers in the modern age. But the transition comes with potential pitfalls. The better you understand them, and how to react when they rear their heads, the more seamless and successful your transition will be.
Take your time to explore before settling on your chosen merchant account provider and credit card processing partner. Shop around for service providers that meet your anticipated needs and goals. And always keep security at the top of the list of your concerns, both during set-up and throughout the life of your ecommerce store. If you do, you stand to get the most out of your transformation into a successful e-commerce merchant.