What is a Merchant Account, Internet Payment Gateway, and Ecommerce? Online selling and credit card processing explained. Shopping Cart, Payment Gateway, and Merchant Account Resources.
Your guide to getting started in Ecommerce for your home based business
1) Credit Card Internet Merchant Account - In order to process credit cards online the first thing you will need is an Internet Merchant Account. An Internet Merchant Account is a relationship between a business / merchant that is selling goods or services over the Internet (you) and a merchant bank. This relationship enables you to accept web-based credit card payments from their customers. Here is how it works:
The Merchant Bank assigns you a unique number called a Merchant ID Number or MID. This unique number is attached to each credit card transaction that originates from your Web site. The Merchant ID number is also associated with your business checking account. This allows funds captured from your customer's credit card payments to be automatically deposited into the proper business checking account. It takes approximatly 48-72 hours for the funds to settle into your business checking account. To qualify for a merchant account, you must meet the bank's requirements. Most applications can be approved within 24 hours!
Cost for merchant account vary considerably but average $50.00 Application fee, $20.00 per month, 2.49% of the gross dollar amount per transaction plus a $0.25 per authorization fee per transaction.
2) Credit Card Payment Gateway - The payment gateway is software and network service that operates between your Web site and the bank authorization systems. The Internet payment gateway is the Internet equivalent to the credit card swipe terminals used in your local retail stores.
The job of the payment gateway is to capture, secure, and communicate the credit card and billing information to the bank credit card authorization systems. Let's look at this process in more detail.
Step 1: Capture & Secure Credit Card Information: As soon as your customer inputs their billing information into your Web site the payment gateway software captures this data . Next the payment gateway software secures the credit card information by scrambling or ENCRYPTING (click here for more about encryption) the credit card and customer related information so it can not be read by anyone else but the bank authorization systems.
Step 2: Transmission: Once your customer's credit card data is secured, the payment gateway software transmits the data through the internet to it's private processing network. The credit card data is merged with additional information such as your Merchant ID Number. Now the data is passed through a connection to the bank authorization systems where the card validity and available credit is verified.
Step 3: Bank Authorization Response: Finally, the bank replies to the payment gateway with an authorization or decline response. The payment gateway then passes this response back to your Web site where it is ultimately displayed to your customer. The payment gateway stores all of your transaction history into a database that you can access online for reporting purposes.
For information on where the funds from your credit card sales go, please see the section on Merchant Accounts.
Internet Payment gateways are typically offered as a fee based service by Internet Payment Gateway providers. These companies charge a set-up fee of around $150.00, a monthly service fee of around $30.00, and a per transaction fee of around $0.25. Recently, some Merchant Banks have been offering the payment gateway service as part of their merchant account service package.
3) Ecommerce Web Site An ecommerce Web site is any Web site that is set-up to accept payments for products or services. The components that are necessary to accept payments via a Web site are as follows:
Secure Certificate (SSL ) - The secure certificate is a service that you need to secure the connection between your Web site payment page and your customer's Web browser. Without the secure certificate your customer's credit card number would be vulnerable to anyone that is able to intercept internet data traffic. Most Web surfers today are savvy enough to look for the lock symbol: . on their Web browser that indicates the page they are on is secured with a secure certificate. If this lock is not present on your checkout page most customers will not enter their credit card information - and you lose the sale. If you are unfamiliar with this lock symbol, you will not see it appear on your browser on this page. Since this page does not ask for any sensitive information from you there is not need for a secure certificate. Instead please go to this Web page. You will notice the lock symbol appears on this page where you are asked to buy a secure certificate. The lock is usually found at the bottom of your Web browser and looks something like this: .
Credit Card Payment Checkout Page - The checkout page is the form that your customer fills out to provide you with their relevant billing information, including credit card number and expiration, shipping address, phone number, email address, etc. The payment gateway is integrated into the HTML code of the checkout page. When the customer submits their order by clicking a pay now button or link on the checkout page the payment gateway captures the credit card billing information and begins transmission of the credit card authorization request.
Recurring Billing System (Optional) - If you are selling a membership or subscription service you may want to bill your clients automatically on a scheduled basis. Recurring billing can also be useful for offering payment plans for pricier products. For example you could offer "4 easy payment of $50.00" for a $200.00 product. The recurring billing system will automatically charge a credit card that you have on file on a date and for an amount that you specify. Recurring billing systems are sometimes an added shopping cart feature but more commonly provided by payment gateway service provider.
Virtual Credit Card Terminal (Optional) - A virtual terminal is a Web based form with data entry fields that are similar to the entry fields on your Web site's payment page. The difference is that this for is for your internal use to process phone, fax, or mail in orders as well as issuing credit card payment credits for returns.
Shopping Cart (Optional) - A shopping cart is a piece of software that acts as your Web site's store catalog and ordering process. The shopping cart allows your customers to select the product they are interested in; review the products details including price; make necessary modifications or additions such as size and color; and purchase the product / check out.
You can buy Shopping carts software or subscribe to a hosted shopping cart service. If you choose to buy your own shopping cart you will need to host it on your Web server and integrate it into your Web site. If you opt to subscribe to a hosted shopping cart solution you simply link the products on your Web site to the shopping cart. Your service provider hosts and maintains the software for you. This is a better solution for non-technical people.
Hosting - You will need to store your ecommerce Web site on a Web server. There are hosting companies that provide space on Web servers that you can rent. Aside from cost of this service there are a couple of things you want to confirm before selecting your ecommerce Web site hosting provider.
A) Is the server Operating System that your ecommerce Web site is going to be placed on compatible with your shopping cart software. ( if you are using a shopping cart)
B) Do they provide good Web site statistical reporting that you can access anytime through an administration Web site. This is important for marketing purposes.
The total cost for purchasing all of these pieces separatly and building the Web site is between $3000.00 and $5000.00 to set-up and around $150.00 per month for all of the various services. There is a another option.
Begin Accepting Credit Cards On Your Site Now! Apply for an Internet Merchant Account and Complete Ecommerce Solution Now. You will be directed to Charge.com, the best prices and online set-up service we have found for Internet Merchant Accounts. $0.00 Application Fee, includes payment gateway, virtual terminal for phone orders, ability to accept checks, shopping cart software and most accounts are set-up within 24 hours of submission of this short online appliation.Get started - Click here.
Marketing Your eCommerce Web Site - How will you drive customers to your Web site? This is done through 4 primary methods that you must consider.
a) Search Engine Placement - The most efficient way to drive qualified visitors to your site is to have it show up within the first several pages of search results of the most popular search engines such as Google, Yahoo, AOL, MSN, Alta Vista, etc. Alas, this is not easily done, especially if you are in a competitive business. If you can pull this off get ready for muy mucho traffic that will not cost you a dime. You will appreciate this much more when you become familiar with the other marketing options listed below.
What you need: A search engine optimized site, links to your Web site from other relevant Web sites. For more on getting great search engine placement you must see Search Engine Watch.com
b) Pay Per Click Advertising (PPC) - For instant traffic from the biggest Web sites online, you can utlize this efficient and very effective advertising option. Basically, you agree to pay a rate for every visitor who clicks through from a search engine or Web site to your web site. It's simple and quick. Each unique keyword phrase (e.g., baby strollers) has its own bid price. You set the budget. With a credit card and a web site readied, you're on your way to advertising on the web's top sites in no time. For details on PPC advertising check out SEOConsultants.com
c) Banner Advertising - Simply put,you pay another Web site to place your advertisement on their Web site. Costs range between $2.00 and $10.00 per thousand impressions (page views) of your ad.
d) Affiliate Marketing - Affiliate marketing is where you offer a commission to other Web site operators (your affiliates) for referring buyers to your Web site. Of course, you will need to keep track of all of these affilates, who sold what, and how much you owe in commissions to you whom. There are three choices build your own affiliate management systems, install an off the shelf affiliate management system, or join an affiliate network. Let's look the two latter options:
If you purchase and install your own affiliate management software you will also need to track down your own affiliates and cut and mail them checks on a scheduled basis. The upside to doing it yourself is that you will not need to pay additional fees to an affiliate network service.
Choosing an affiliate network service makes sense if you are a small business since they manage all the technical, and back office aspects of the operations. Also, affiliate networks already have the Web site affiliates in place to start promoting your site. The down side: Set-up fees and transaction fees on top of the commissions you pay out to the affiliates.
e) Email Marketing - Not SPAM, please! What you want is called opt-in email marketing. Opt-in means that someone has given you permission to send them email. Offer a free newsletter on your Web site to build your opt-in list. Also, be sure to place an opt-in check box on your checkout page so you can email future sales promotions to your customers.
. on their Web browser that indicates the page they are on is secured with a secure certificate. If this lock is not present on your checkout page most customers will not enter their credit card information - and you lose the sale. If you are unfamiliar with this lock symbol, you will not see it appear on your browser on this page. Since this page does not ask for any sensitive information from you there is not need for a secure certificate. Instead 
Begin Accepting Credit Cards On Your Site Now!