How Does E-commerce Work?
This article will give you a better understanding of what a merchant account is, why you need it, and the issues to be aware of when building an e-commerce website.
Leverage credit card processing to maximize your results.
Credit card acceptance is the single most important step towards building and operating a successful business on the internet. The future of your business will be determined by your ability to generate sales and profits from your website.
In terms of the return on investment, nothing compares to credit card acceptance. Nothing else can return such a huge and immediate increase in sales, profits and productivity.
However -- you should NOT try to get a merchant account without first getting the facts, and understanding how to implement credit card acceptance to your maximum benefit. Otherwise, you could be setting yourself up for a tremendous exercise in frustration, wasted time and lost money.
The Basics - What is a Merchant Account?
Understanding e-commerce is actually quite easy. There are 3 things that make up an e-commerce transaction:
• A shopping cart
• A payment gateway
• A merchant account
The Shopping Cart
The shopping cart software is what keeps track of the products your customers want to purchase as they surf through your website. It is the software that powers the "Add to Cart" buttons that you have probably seen on many e-commerce websites. There are hundreds of popular shopping cart programs to choose from. Some are extremely easy to use, while others are targeted towards advanced webmasters. Picking a good shopping cart can be a daunting process if you are new to e-commerce and have just started your research. If you would like some help selecting a good shopping cart for your business do not hesitate to contact us.
Some merchants offer services and do not have a product based website. Even if you don't sell products on your site, you will still have some type of software that calculates how much the customer is supposed to pay you. Think of the shopping cart as the cashier at the grocery store who rings through your groceries. It is their job to figure out how much money you are supposed to pay. In an e-commerce website, the software performs this job and will determine how much you owe for the sale. Once the shopping cart has figured out how much you owe for the sale, it needs to send this information somewhere so the credit card can be processed. This brings us to the second part of every e-commerce transaction - the payment gateway.
The Payment Gateway
The function of the payment gateway is actually quite easy to understand. When you go to a gas station and pay with your credit card, the attendant swipes your card through a payment terminal. The payment gateway does the same job as that little electronic device, except because it's an online transaction the credit card is not physically swiped through a terminal. Instead the shopping cart securely encrypts the credit card and order details and sends it off to the payment gateway to be processed.
The payment gateway will electronically contact the customers card issuing bank and check to see if they have sufficient credit to pay for the sale. If so, the card issuing bank will return an authorization and the funds will be debited from the customers credit card balance.
When those funds are captured from the customers credit card account, they must go somewhere. This is where the final part of an e-commerce transaction comes in - the merchant account.
The Merchant Account
When the payment gateway processes the transaction and the customers credit card is charged for the sale, that money has to go somewhere. Specifically, it needs to deposited into a bank account. Funds from credit card sales are deposited into a special type of bank account -- called a "merchant account".
That really is all a merchant account is - a bank account that is used to hold funds captured from your credit card sales. Then, once per week the money is sent out of your merchant account, and into your regular business bank account.
Beyond The Basics: The Information You Should Know Before Applying
In the next few pages you will find more in-depth information about how to get a merchant account for your business, so that you can accept credit cards on your website. It will show you what to watch out for when applying for a merchant account, how to get the best rates, and how to properly implement and leverage credit card transactions to maximize your results and generate the greatest profits possible.
This article has been written by David Goodale, CEO at Merchant Accounts.ca, and an industry expert with over 10 years experience specializing in online commerce. The information David shares is invaluable to any business that currently accepts, or plans to accept credit cards online.
Some of the topics he covers are:
• How to get the best rates possible
• Commonly made mistakes that cost merchants thousands of dollars in lost revenue
• How to leverage credit card acceptance to maximize your sales
• How to spot misleading information and merchant account pricing tricks
• Why Canadian merchants often don't get good rates - and how to avoid this problem
That is just some of the information David touches on. The article finishes with a list of questions that you must ask your potential merchant account provider before applying for your account.
The information you will find in this article would normally be purchased in expensive internet marketing courses or industry seminars.
We are providing this information for free so that you can confidently go about the process of getting a merchant account for your business without the difficulty, expense or learning curve many merchants have had to go through in the past.
By understanding the issues, pitfalls, and advantages of credit card acceptance, you can put these tools, strategies and techniques to work for you so that you can maximize your sales and get the most out of your website.
|
