How to Accept Credit Card Payments on Your Website / How Businesses Initiate Online Payment Processing

As the popularity of online shopping grows each year, more retail businesses are making the critical business decision to expand their business activities to include eCommerce. Offering products and services online increases sales potential with current and new customers while staying competitive with other eCommerce businesses.

One of the easiest ways to start an eCommerce platform is to offer credit card payments, but how do you offer it online as a small business owner?

In this article, we discuss how to accept credit cards on your website.

How To Accept Credit Card Payments On Your Website In 2022

The two most popular methods for accepting credit card payments are setting up your merchant account or using a payment processor. The option and company you choose to fulfill online transactions will depend on your overall needs, but before you make your final choice, it does help to understand a few details about online purchases.

Transaction Fees for E-Commerce Payment Processing

Running credit cards online is a powerful way to increase your average sales, but similar to running credit cards in a brick-and-mortar store, there are a few steps in eCommerce sales that require a fee. Some set fees can’t be changed, while others vary by provider.

  • Credit card company transaction fees: As of 2021, credit card interchange fees charge a percentage of each amount taken plus an interchange fee of about 10 cents per transaction. Rates range from 1.3% to 3.5% and are not negotiable. Each percentage depends on the payment provider (Visa, Mastercard, American Expres, etc.), type of card, and the type of business you run.
  • Credit card processing company fees: As with standard credit card purchases, e-commerce credit card processing companies charge fees on top of the interchange fees to provide processing services. Fees range based on the type of transaction and its associated risk. Processors don’t always charge the same amount, and less than forthright companies can hide fees, so when shopping for competitive transaction fees, look over the details closely.
  • Merchant account fees: This fee consists of an upfront fee for setup plus a monthly maintenance fee of between $10 to $30. You will also have a per-transaction fee. You can choose from a flat-rate fee, interchange-plus fee, or tiered transaction fee based on the payment risk.
  • Aggregated merchant account fee: This is an option of using an outside provider with its merchant account. This service results in a per-transaction percentage fee (typically around 2.9%) plus an additional transaction fee of approximately 10 cents per transaction. Though you are paying a higher percentage, it is a lower monthly fee than a bank merchant account.
  • Merchant services fee: This is a fee to your hardware and software provider in the form of a monthly or per transaction. The price will range depending on the number of services you need.
  • Payment gateway fee: Supplied by the payment processor, the fee is typically in the form of a monthly cost of between $10 and $25 per month. A payment gateway is a standard component for online credit card transactions, thanks to advanced fraud protection. As a result of reduced risk, you also benefit from lower per-transaction fees for credit cards.

Remember that though rates vary by the provider, the rates can also depend on your business performance. For example, it can fall on the higher side for high-risk businesses. Also, note that many processors offer additional benefits worth evaluating for their price.

Understanding Card-Not-Present eCommerce Credit Card Transactions

Online transactions are also characterized as card-not-present transactions. You are not physically handling the card, and these have a higher processing fee than in-person purchases due to a higher risk of fraud, but using a payment gateway can help reduce this cost. More on that in a bit.

How to Accept Payments on eCommerce Sites

Shoppers can place their entire transaction online with an online payment form and payment gateway. You will need the right tools to initiate these transactions, such as:

  • A payment processor to complete credit card transactions.
  • A website or eCommerce platform allowing customers to make purchases online
  • A shopping cart and payment form for customers to provide credit card information
  • A payment gateway to communicate with the credit card company to gain authorizations or denials
  • A merchant account to receive payments from customers

Here are the steps to set up online credit card payments. Your merchant services provider can assist with each step, and BNG Payments does this work often.

Step 1: Choose a Payment Processor

When selecting a processor, look for payment gateway capability and a reputation for quality merchant services.

Keep in mind that the processor should be able to aid with other steps in the setup process.

Step 2: Set Up Your Online Payment System

E-commerce sites need a dedicated area where customers go to access your payment form and shopping cart.

Step 3: The Checkout Process: Setting up an eCommerce Shopping Cart

There are many compatible carts available to meet your business needs, including custom-built shopping cart options with integration with emailed invoices and sales advertisements via links and one-click checkout options for easy payment processing for high-intent shoppers.

When designing your checkout page, boost your checkout conversion by creating a custom shopping cart with an ultra-simple checkout experience. Make the interface intuitive and clean, ensure the button at checkout is prominent, and design the page to fit your brand identity (logo, colors, etc.). To improve checkout conversion even further, allow for customer financing checkout options.

Some website providers, such as WordPress, come with an easy-to-install shopping cart plugin, and you can also purchase shopping cart software separately. If you use a third-party provider for payment, they can provide you with a link for payment.

Setting up a Merchant Account

A merchant account and a payment gateway may come separate depending on the type of account you open. You can also consider using an all-in-one solution that combines both for easier processing and improved service under one roof. The more established the business is, the more benefits you get, such as additional payment methods capabilities and competitive rates.

What is a Merchant Account? How to Accept Credit Card Payments

A merchant account is a business bank account explicitly designed for merchants to accept online and credit card payments. It is a separate account from your business account.

In the steps of a sale, the bank sits between your business and the credit card company to authenticate the funds and handle the behind-the-scenes technology. After the bank receives consumer credit approval, you accept the funds in your merchant account. Since this business banking method moves funds before the shopper pays the credit card bill, the funds are preauthorized and sent to you from the bank as a line of credit.

A merchant account is offered in one of two ways: directly through a bank or through a third-party payment processor (TTTP).

Advantages and Disadvantages of Setting Up Merchant Accounts Through Your Bank

A merchant account through a bank can work much like a TPPP by authorizing funds, and a merchant account costs less than a TPPP, which is particularly beneficial if you run ultra-high volumes of transactions. Still, there are some challenges. One that most business owners complain about is the extensive application process, even for basic accounts. They often have complicated application programming interfaces that require information like:

  • Your bank information
  • A credit check (business or personal)
  • Your payment model
  • Record of your tax returns
  • Understanding of your business activities

Banks sometimes charge setup fees and may ask to sign up for a long-term contract. Plus, if you already have a TPPP to run in-store credit card transactions, you will have more than one company to manage.

The infrastructure of bank accounts is also not as in-depth as a TPPP, which specializes in this type of work.

If you still decide to stick with your merchant account, your current bank is an excellent place to start. If they don’t offer it or the rates are too high, try other local banks and even consider moving all your business bank accounts to the lowest-priced provider for an improved relationship and potential cost savings.

Obtaining Merchant Accounts Through Third-Party Payment Processors

A TPPP also offers a merchant account, and since they also provide gateway platforms, you benefit from an all-in-one service and a smoother approval process. We offer this service at BNG Payments.

PPPs provide you with dedicated account managers that make the process of setting up and honoring credit cards easy. You can avoid issues like long contracts, long forms while still enjoying competitive fees.

Typically, TPPPs come at a higher rate than a merchant account, but with more benefits under one roof, you enjoy added convenience, and the more services you take on from a TPPP, the better your rate.

As your business grows, you can always switch to a merchant account at your bank later, but many small businesses stick with third-party providers over the long term, thanks to the ease of use.

Using an eCommerce Platform

Popular eCommerce platforms like eBay, Esty, and Shopify are just a few of the dozens of platforms that offer processing and merchant account services. If you have an account set up on any of these systems, they can accept most major credit cards as well as gift cards. Setup is pretty simple: you can add the the-commerce capability option onto your affiliated website. You will need to add your employee identification number (EIN) and some background baking information.

These companies typically charge a monthly and per-transaction fee.

Step 5: Set Up Your Payment Gateway

A payment gateway is software that communicates with the credit card company to gain authorizations or denials for customer payments. A gateway encrypts the online shopper’s credit card information from your website’s payment form and sends it to the credit card company via your payment processor. Since PPPs provide this service, the term payment gateway is sometimes used to describe a TPPP. You will need to fill in an application with financial information to enroll, but the process becomes easier when you use the same TPPP that oversees your credit card transactions.

Consider an All in One Solution

Some companies provide a gateway, merchant account, and processing services. There are some added savings and a more straightforward setup having everything under one roof.

Questions About eCommerce Credit Card Fraud

Some customers may have concerns about submitting credit card information online, but this type of transaction is exceptionally safe. Credit card fraud often takes place in person, and online purchasing avoids this issue. There are also a large number of built-in fraud protection tools in place. Additionally, each step of an eCommerce credit card purchase (payment gateway, payment processor, and movements of money across the credit card network) comes with its fraud protection. When all combined, you benefit from superior fraud reduction and fewer chargebacks. You gain the benefits of a comprehensive and professional fraud prevention team.

BNG Payments: An All-in-One Integration and Payment Solution

When shopping for your merchant account provider, online payment gateways provider, and online payment processing provider, having them all under one roof improves service, attention, and cost savings. BNG Payments offers all of these services, but we also extend these same services to cover other payment options beyond credit cards. We provide a hands-on application and setup process to make taking electronic payments quick and easy. From opening a merchant account to creating a shopping cart, running transactions, and providing advanced fraud protection at each stage, you get one source for all your needs.

Additionally, you also enjoy improved customer service under one roof, making it easier to resolve issues as they arise. And we offer competitive rates with precise readings on all associated costs, including flat-rate payment processing.

To learn more or get a free quote, contact us here.