Small Business Banking - Online Payment Tips and Tools

Having a small business online makes sense considering the fact that many consumers now prefer to do their shopping from the comfort of home. However, small businesses need to carefully choose the right bank to process the payments made on their websites. There are several different options available, so examine the factors of each one carefully. When choosing a provider consider the affordability of the service, the security, how accessible it is and its ability to convert currency.

Price is a guiding factor in choosing any service. Processing payments online is never free. You need to choose the best service that you can without cutting too deep into your profits. However, never sacrifice the security of your customers. Every company needs repeat business and a good reputation, and an insecure service will not build trust with your customers. Choose a service that you know will protect the privacy of your customers, and they will return.

Accessibility and the ability to convert currency go hand in hand. Online companies can have customers throughout the globe. Make sure that your service is easily accessible and has the ability to convert currency.

How Online Payments Work

Online purchases require each business to have a merchant account in order to process credit cards as well as secure third-party gateway. If you process credit cards directly, you are responsible for the privacy of your customers.

A payment gateway works with the online shopping cart, your merchant account and the bank that issued the customer's credit card. The gateway determines the cards validity, encrypts the transaction, sends the information to the appropriate destinations and decrypts information for the shopping cart.

As with any other online service, each gateway is different. Make sure that the gateway you choose will be compatible with the other systems you have such as the shopping cart. If you have a shopping cart software for your website, find out if the provider will offer gateway service support.

Besides compatibility, it is essential that the gateway have The Address Verification System (AVS). The AVS confirms the address the credit card account is billed to in order to prevent fraud and protect consumers. Having AVS, however, might actually reduce the fees for your merchant accounts.

Examine each gateway option carefully. There are different fees associated with different services. For example, a fee for chargebacks on sales that prove to be fraudulent may be an option you might want to consider.

Options for Accepting Online Payments

There are options for setting up a merchant account without going to a traditional bank. Some companies specialize as merchant service providers. They usually have lower rates for their services than traditional banks because banks consider online purchases to be high risk. Well-known payment processing merchant service providers include Merchant Warehouse, Instamerchant or Durango Merchant Services. Each company has its own services and fees, so compare the differences and see if one of these providers will work for you and your small business.

Many businesses opt to use third party credit card processors to process their sales online. These options often have lower fees than traditional merchant accounts. Paypal, 2Checkout and ClickBank are examples of third party credit processors. Paypal is probably the most popular service for small businesses because it costs nothing to begin and only takes a small potion of the money it processes. It also automatically converts currency and provides its own security since the business never directly processes the credit cards.

Direct transfers or direct deposit is another option for online accounts. This ensures that the money is immediately sent to your company account. The drawback, however, is the fact that this method requires the merchant to provide his or her account number, and most people are not comfortable with that idea.

Do your homework at every stage of setting when setting up your online store. Weigh the different services and fees associated with merchant accounts, gateways and providers. Consider the needs of your business and what you and your customers can afford. Choosing a service with high rates might mean that you need to pass along the cost to your customers, which could actually lower your sales. However, the cheapest option might not be very secure, and you are responsible for protecting the privacy of your customers. An insecure website can cost you dearly if you process a fraudulent transaction on your website.

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