The Ecommerce Guide to Online Payment Processing

Accepting credit card payments online has become extremely simple, to the point where the majority of a new company's time is usually spent in comparing the different types of service rather than setting up the service. There are many payment processors available, and most of them are cheap and easy to integrate into already existing websites. 

Online payment processing is an extremely important part of eCommerce. The ideal online payment processor is fast, cheap, and easily customized. Unlike traditional payment processors, it usually doesn't take much to set up an online system. Traditional payment processors usually need credit checks and a background check, where an online payment processor usually just needs some personal information and a bank account.

There are two main ways that a merchant can integrate a payment processor into their website. A gateway processor integrates completely into a website. These gateway processors are usually more expensive than alternatives and can cost a few hundred dollars to initially set up, but they make the transactions very simple to the clients. Most larger companies use this type of credit card processor. Unless the business owner is fairly technically adept they will usually need some help to fully install it on their website. Most gateway processors need a contractual agreement that can last up to a few years. While this secures lower rates, it also requires that the business owner commit to using the service for that long, and the penalties of discontinuing the service can be high.

Third Party Credit Card Processors

Third-party credit card processing companies are slightly different. For a third-party processor, clients are re-directed to the third-party to complete the sale, and then they are sent back to the main website. Third-party processors are usually very inexpensive to set up and need very little work. Many users like third-party processors because it means they can use the same payment system for multiple websites. Many third-party processors are extremely popular, so consumers are already used to using them. They don't integrate completely into the sales website, however.

Payment Gateways

For many websites, a gateway processor will be preferable because it seems more professional and can be customized to the website. Using a gateway processor also means that users that don't have an account with the third-party processors won't be left out. Gateway processors do usually have higher initial costs, but many of them have lower rates per transaction, so there will be a savings over time.

For websites that are just starting out or still building a client base, a third-party processor may be a good way to start out before making a more expensive investment. Third-party processors are very easy to use, and most people do have accounts with them. Many third-party processors also make it easy to track sales and to run sales reports, though they don't have as comprehensive reporting mechanisms as gateway processors. Third-party processors don't need any type of agreement or contract but keep in mind your industry type will effect your pricing.

Setting up an online payment processor is the first significant decision that many online businesses will have to make. Ultimately, most payment processors are similar, so it's advisable to go with the company that will offer the lowest fees and the best rates. Setting up an online payment processor is easier than it may at first seem, and many websites can start collecting their payments within a matter of hours.