e-Commerce Payment Processing for Small Business – Different from Brick and Mortar
Consumer buying habits have changed drastically over the last several years. Businesses have had to find new ways to meet the needs of their customers. To do this, many businesses have begun to transition to, or add online sales to their business repertoire. But e-Commerce Payment Processing for Small Business is a totally different ballgame for owners used to running a retail store.
So, as a follow up to our article about taking your business from retail to eCommerce, we wanted to give you some tips for accepting eCommerce payments.
There are a few things that make accepting payments online a bit trickier than face-to-face payments. Some of them have to do with the online environment, others relate to consumer habits. If you follow a few best practices for accepting eCommerce payments you’ll find your online success will come much easier.
e-Commerce Processing – Five Key Facts
eCommerce rates are higher- but you shouldn’t get taken advantage of.
Visa and MasterCard set the Interchange fees higher for eCommerce transactions than retail locations. This is simply due to the propensity for more fraud in card-not-present transactions.
But, don’t tolerate getting nickel and dimed to death. Always demand Interchange-Plus pricing for your merchant account. Interchange-Plus pricing is the fairest pricing model since the rate is transparent and there is nowhere to hide extra fees.
A merchant service salesman with less than the highest morals will quickly try to take advantage of eCommerce business owners. Unfortunately, they often get away with writing an eCommerce account at higher than fair rates. They aren’t worried about competitiveness because they know these businesses aren’t “door-knocked” as much as retail businesses.
Likewise, business owners know these rates are higher and often don’t question the rates they’re quoted. 
With Interchange-Plus pricing the provider will mark-up the base rate with a flat percentage and add a per-transaction cost. In addition to your processing rates, you’ll also have a monthly service fee for your gateway and a gateway per transaction fee. Everyone using a gateway pays these fees. Even retail stores. This is a fee charged by the gateway provider, but some payment providers mark it up. And of course, eCommerce merchant accounts will include a standard statement fee.
Compare quotes closely for the best rate for accepting eCommerce payments.
Don’t be afraid to compare quotes. And make sure you compare apples to apples. This is another reason why Interchange-Plus pricing is clearest. It’s much easier to understand and see exactly what rates are listed and what aren’t.
For example, a salesman gives you a quote with “their rates” and it sounds awesome. But, that is because their rate promise didn’t include other fees that are not “theirs” such as the gateway fees. Their quote could look much lower than another but isn’t once you add it all up. Then you try to compare that to a quote that includes both the merchant providers rates and fees and all other fees involved that are passed through to the merchant. This second quote will look higher on the surface but could be the better deal in the long run.
Make sure you fully understand all of the “rates” and compare apples to apples. This way you’ll be sure to find the most straight forward quote and processor to work with.
Set yourself up for underwriting success.
The eCommerce environment poses a higher risk to the acquiring bank than retail stores. This is largely due to the fact that the customer and the credit card being used is not physically there. It is much harder to check to make sure the person using the card is the owner. In addition, online sales tend to attract more fraud than retail stores do. Higher risk means tougher underwriting.
Underwriters tend to scrutinize the business model, website, and creditworthiness more than they might for a retail application. Set yourself up for success by turning in a complete application at the start. When it comes to your online store (website), have your ducks in a row prior to turning in your application.
Underwriting will expect to perform a complete site audit, even if your site is not yet live. They will be looking to make sure you have your customer service policies in place. They’ll also review both your shipping and return policies for best practices.
Fraud management is a must with an eCommerce merchant account.
Card-not-present purchases add up to less than 15% of total worldwide purchase volume. But they account for 54% of the total losses to fraud!
All businesses need to mind standard security protocols for accepting payments and make sure they’re completing their PCI Compliance. But because online merchants are prone to fraud, more aggressive fraud management tools need to be considered.
Fraud management tools will generally come with your gateway and your merchant provider may have plugins as well. Standard fraud management will include payer authentication tools and enhanced fraud detection services. In addition, tokenizing information and storing it outside the native server will be a function of the gateway.
If more robust fraud management is required you may have to pay for extra software. However, chargebacks, data breaches, and fraud cost businesses much more. It’s a small price to pay to protect your business, your customer’s private information, and transaction data from thieves.
Give buyers the confidence to purchase from you.
Marketing your online business and products is very important. But nurturing buyer’s confidence in your brand is even more so. In order to sell things online, you have to give customers a reason to feel confident in making their purchase.
They can’t touch and feel the product. You need to convince them of the quality of the products. Consumers are wary of putting their payment information online. You need to make them feel safe. Find ways to instill confidence throughout the customer’s entire shopping experience.
One of the ways you can do this is to display security logos and trust badges. These logos and badges have been proven to have a positive effect on consumer perception.
Security logos such as Symantec give customers a sense that your site is secure and safe. Trust badges such as the BBB Accredited Business badge tells them you’re a “stand-up” business.
But you can also go one step further with a few tweaks:
- Set up your checkout so that the Purchase Summary is displayed prior to getting to the Enter Payment Information screen. Customers want to make sure it is correct before paying. Don’t make the customer assume everything is right- show them.
- Show the Visa, MasterCard, and PayPal badges on your checkout page and list of accepted payment types. Consumers like to see brands they recognize and trust.
- Lastly, make sure you have a rock-solid customer satisfaction policy and display it proudly. Additionally, create a return policy that is easy for the customer. There are easily downloadable free badges such as “100% customer satisfaction” or “money-back guarantee” that help to eliminate the perceived risk of buying online.
- These all seem like small details. But it’s paying attention to these details that will have a big impact on your eCommerce success.
Easy and Fast Checkout
Now that you have your customer’s attention and built their trust in your brand, it’s time to let them pay you. It may not seem like it, but part of accepting eCommerce payments is helping your customer take out their wallet and pay you. You want to make this part as frictionless as possible.
Consumers have changed the way they shop over the years and technology has largely been the catalyst. When consumers shop online they are no longer at home sitting in front of a computer. They are shopping on computers, laptops, tablets and mobile phones. They are shopping wherever they happen to be at the moment, and at all times of the day and night.
Your website must be mobile compatible, anything less is unacceptable. Trying to shop, let alone buy on a cell phone from a site that isn’t mobile compatible is frustrating.
Different generations like to shop differently, and the way they pay differs. They want to pay with forms they are comfortable with and recognize. In short, they want to pay whatever way they want.
To appease all types, you must accept multiple forms of payment types. Of course, you will accept credit cards and debit cards. But you should also make sure you offer a PayPal link. Many customers will want to pay with cash but don’t want to create a PayPal account. Don’t lose these customers when it is so easy (and inexpensive) to offer ACH payment processing.
Don’t give your hard-earned customers a reason to abandon their cart right at checkout.
