Credit Card Processing Online
A few things you should know before starting to sell online.
- Never store credit card numbers online! Never!
- Never store credit card pin numbers online either!
- Process credit cards immediately, or use a reliable 3rd party processing web site to do it for you.
- Be sure you use a Secure Socket Layer (SSL) at checkout for encrypting the customer's information over the Internet
- Be sure to follow the credit card companies procedures for processing credit card transactions online. Credit card companies have stiff fines for those web merchants that do not follow their rules.
- If you decide to use a 3rd party vendor who bundles a merchant account and gateway service together make sure they are reputable and fully secure. Paypal.com and 2Checkout.com are examples of these type companies.
Merchant Account
It is a merchant's special bank account for depositing credit card transactions. Most businesses know about swiping credit cards from a terminal. Because there is no credit card present when buying online you need an special merchant account for processing transactions over the Internet. With an Internet merchant account you also need a payment gateway to process your online credit card transactions. Internet merchant account rates are slightly higher because of the higher risk of fraud when the credit card is not physically present.
Payment Gateway
A gateway is a company that accepts and processes credit card transactions from you for a fee (percentage of the transaction). They are responsible for sending the credit card transaction to the payment processor. They can also provide additional value-added services such as reporting, transaction logging and fraud prevention.
Payment Processor
These companies perform the actual credit card charges and settlements. Every transaction eventually goes through a processor.