Online credit card processing is an essential component of any modern small business. It allows you to accept payments securely over the internet, increasing your sales and revenue potential. Here’s a detailed guide to online credit card processing for small business.
Table of Contents
- Why is Online Credit Card Processing Important?
- How Does Online Credit Card Processing Work?
- Types of Online Credit Card Processing
- Hosted Payment Gateway
- Integrated Payment Gateway
- How to Choose an Online Credit Card Processor
- Setting Up Your Online Credit Card Processing
- Security and Compliance Considerations
- Benefits of Online Credit Card Processing
Why is Online Credit Card Processing Important?
With the rise of e-commerce and online shopping, online credit card processing has become essential for small businesses. Consumers expect to be able to purchase goods and services online, and businesses that don’t offer this option risk losing customers.
Online credit card processing for small business also makes it easier for small businesses to expand their customer base beyond their local area. By accepting payments online, you can sell to customers anywhere in the world.
How Does Online Credit Card Processing Work?
Online credit card processing allows businesses to accept credit card payments online. The process typically involves the following steps:
- The customer selects the product or service they wish to purchase on the business’s website.
- The customer enters their credit card details on the website’s payment page.
- The payment gateway securely transmits the credit card details to the payment processor.
- The payment processor verifies the credit card details and checks for sufficient funds.
- If the payment is approved, the payment processor sends the funds to the business’s merchant account.
- The payment processor sends a notification of the transaction to the payment gateway, which displays a confirmation to the customer.
Types of Online Credit Card Processing
There are two main types of online credit card processing: hosted payment gateways and integrated payment gateways.
Hosted Payment Gateway
A hosted payment gateway is a payment processing solution where the payment page is hosted by a third-party payment gateway provider. When the customer clicks the “pay” button on the business’s website, they are redirected to the payment gateway’s website to enter their payment details. The payment gateway then sends the funds to the business’s merchant account.
- No need for the business to handle sensitive payment information
- Reduces the risk of fraud and security breaches
- Easier to set up and maintain
- The payment gateway’s branding may differ from the business’s branding, leading to confusion for customers
- Limited control over the payment page design and user experience
Integrated Payment Gateway
An integrated payment gateway is a payment processing solution where the payment page is integrated into the business’s website. The customer enters their payment details directly on the business’s website, and the payment gateway processes the payment in the background.
- Provides a seamless user experience for customers
- Allows for greater control over the payment page design and user experience
- Can be integrated with other systems, such as accounting software and customer relationship management (CRM) tools
- Requires more technical expertise to set up and maintain
- Increases the risk of fraud and security breaches if not implemented correctly
How to Choose an Online Credit Card Processor
When choosing an online credit card processor, there are several factors to consider:
- Fees: Look for a processor with transparent pricing and no hidden fees. Consider the transaction fees, monthly fees, and setup fees.
- Security: Make sure the processor is PCI-compliant and uses encryption and other security measures to protect sensitive payment information.
- Ease of use: Choose a processor that integrates easily with your website or e-commerce platform.
- Customer support: Look for a processor that offers 24/7 customer support in case of any issues.
- Reputation: Choose a processor with a good reputation and positive reviews from other businesses.
Setting Up Your Online Credit Card Processing
To set up your online credit card processing, follow these steps:
- Choose an online credit card processor that meets your needs.
- Set up a merchant account with your chosen processor. This will allow you to accept credit card payments.
- Integrate the payment gateway into your website or e-commerce platform. This may involve installing a plugin or using an API.
- Test the payment gateway to ensure that it is working correctly.
- Train your staff on how to use the payment gateway and handle any issues that may arise.
Security and Compliance Considerations
When accepting credit card payments online, it is important to take security and compliance seriously. Failure to comply with security standards can result in data breaches and financial loss. Here are some security and compliance considerations to keep in mind:
- PCI DSS Compliance: The Payment Card Industry Data Security Standard (PCI DSS) is a set of security standards designed to protect payment card information. Businesses that accept credit card payments must comply with these standards.
- Encryption: Ensure that your payment gateway uses encryption to protect sensitive payment information.
- Fraud Prevention: Implement fraud prevention measures, such as AVS (Address Verification Service) and CVV (Card Verification Value) checks.
- Regular Security Audits: Conduct regular security audits to identify and address any vulnerabilities in your payment processing system.
Benefits of Online Credit Card Processing
Online credit card processing offers several benefits for small businesses, including:
- Increased Sales: By accepting credit card payments online, you can reach more customers and increase your sales potential.
- Improved Cash Flow: Online payments are typically processed faster than traditional payment methods, improving your cash flow.
- Reduced Costs: Online credit card processing can reduce the costs associated with manual payment processing, such as paper checks and manual data entry.
- Increased Security: Online credit card processing can be more secure than traditional payment methods, reducing the risk of fraud and security breaches.
Online credit card processing is an essential component of any modern small business. By choosing the right online credit card processor and implementing security and compliance measures, you can accept payments securely and efficiently, increasing your sales and revenue potential.