If you’re selling auto parts and/or accessories online, you need a method of collecting payments. This article explains the basics, and offers some advice as well. If you’re new to ecommerce, this post is for you.
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It’s All About Credit Cards
While there are some systems for taking checks online, collecting payments online is all about credit cards. A lot of business owners don’t like to accept credit card payments because…
- Processing fees. LOTS of companies offer credit card processing and all of them collect fees – usually, there are three fees collected (see below).
- Merchant account fees. Most credit card processing companies want business owners to open a merchant account with them before they’ll help you take credit cards. Merchant accounts come in all shapes and sizes and they can be very confusing, but…
- But you don’t necessarily need a merchant account. This is one of the biggest misconceptions about accepting payments online. You don’t need to open a merchant account to start taking money, but they can save you money as your business grows. However…
- You DO need a payment gateway. In English, the words “payment gateway” mean “a secure web page where people can type their credit card info.”
There are lots of payment gateway options. If you’re looking for something fast with no up-front costs, check out PayPal’s Payflow Payment Gateway. There’s no monthly fee, and Payflow is pretty popular in terms of ecommerce integrations.
Credit Card Processing Fees Explained
There are three basic types of fees that you can pay when you accept a credit card payment:
- A percentage of the transaction. Some processors take as little as 1.9% of the total amount collected, where others will take as much as 4%. Generally speaking, if you don’t pay a monthly fee for a merchant account, you pay more per transaction.
- A flat transaction fee. Each and every transaction there’s a token sum you have to pay. Some processors charge as little as $0.10 every transaction, some quite a bit more.
- A monthly account fee. If you pay a monthly fee for credit card processing (and/or a gateway), you should expect to receive some ‘extras’ as well as low transaction fees.
Now that we’ve covered the basics, here’s what you need to do.
First, find a payment gateway. PayPal is the go-to option for ecommerce businesses, but Authorize.net is also quite popular. Whatever you choose, make sure your website is compatible.
Second, determine if you paying a monthly fee will save you overall. If you’re doing several thousand dollars a month in credit card sales, you might come out ahead paying a monthly fee if you get a very low transaction fee in return. But you need to do the math to find out.
Three, setup the integration with your website. Once you’ve got your plan, talk to your web developer/website provider about setting up the gateway. Most of the companies that offer ecommerce platforms offer several built-in payment gateways, so this is usually pretty easy.
Still, before you sign up for any payment processing, be sure to verify website compatibility.