DRH Internet Inc. Website hosting technical support library

Startup cost: $500. (with Cardservice International, our partner)
Per transaction cost: lowest
Company name on your customer's credit card statements: your name
Control over details of the processing: more control

Summary

This is the standard method of accepting credit cards that used to be the only way to go: you get your own merchant account that allows you to directly process credit cards. Basically some bank is giving you direct access to the VISA/Amex/Discover network and is trusting you to act responsibly. A credit check is involved, but Cardservice says over 99% of all applicants are accepted.

Because the startup costs are greater on this method it's usually best for established companies where the lower cost-per-transaction will add up over time and save you money. If you are just getting started and $500 seems like an uncomfortable amount of invest, using a third party processor is probably the best way to go until you have proven your idea.

We have a special relationship with a company that provides merchant account and processing services, Cardservice International. We recommend that you use them, since we will be better able to support you because of our familiarity with their systems. Information on the details of their services, including an online application, can be found in our Credit Card processing with Cardservice International document.

Technically how things work

With Cardservice International you have two ways to process the cards:

• Virtual LinkPoint - allows merchants (you) to manually enter credit card transactions on a PC through a secure web-based interface on the Internet. Virtual LinkPoint is the Internet equivalent of a point-of-sale (POS) terminal or PC-based transaction software without the hardware/software and maintenance expenses. Sales, returns, authorizations and real-time reports are all provided by Virtual LinkPoint.

• LinkPoint HTML - is a simple, yet sophisticated product and requires a little hands-on work by the merchant to use. It wraps around the merchant's existing Web site, allowing shoppers to select and order products and securely pay for them with a credit card. All the same services provided by the Virtual LinkPoint are available with the LinkPoint HTML.
  Documentation for LinkPoint HTML.
  Example of LinkPoint HTML.

Startup cost: minimal or none
Per transaction cost: highest
Company name on your customer's credit card statements: your processor's name
Control over details of the processing: less control

Summary

With this method you are accepting credit cards through another company. They process the transaction for you on their website using their master merchant account. This means that their name will show up on your customer's credit cards statement and the customer will see in the transaction that another company is involved.

The main advantage is that the setup and monthly fees are minimal, so it is easy to get started. No large up-front cash outlay or commitment.

International users should note that that many of the third party processors require that you and your customer be located in the United States. If you are an international user, look at PayPal which now works with 25 different countries (see here), and CCNow which has no restriction on what country you must be in.

Some third party processors provide shopping cart services so without much work your site can have a shopping cart setup.

Technically how things work

There are basically two ways that things work.

• Payment link (no shopping cart) - You collect the order information on your server and then provide a link to your third party processor's website. This link includes information such as the name of the service or product that you are selling, the amount of money that you want to collect, and the URL on your website the customer will be returned to when payment is completed. The user is then shown an order form with this information, they fill it out, payment is captured, and they are returned to your website.

• Shopping cart - The shopping cart provided by CCNOW works like this: For each item on your website you create an "add this item to your shopping cart " link which sends the user to the ccnow secure server. The user is presented with a form showing their shopping cart and asking how many of this item to add. When completed, the user is sent back to your site to continue browsing. You also create a "checkout" button on your site, which sends the user to the ccnow secure server again to complete the order. They enter payment information and the order is captured and sent to you.

• PayPal Business Account (recommended)
  http://www.paypal.com/
  Charges 1.9% plus 25 cents per transaction. We've heard a lot of good things about this PayPal service and in our opinion they are a leader. Works with merchants in 25 countries in addition to the United States.

• CCNow (recomended when a shopping cart is needed)
  http://www.ccnow.com/
  "CCNow collects a 9% commission on each sale, and there are absolutely no startup costs and no monthly fees." Includes a shopping cart. Works with merchants in any country.

• EMATIC (also recomended)
  http://www.ematic.com/
  Provides an easy-to-setup online ordering system with "Ematic Order Buttons". Ematic charges just 5% of each transaction plus a $19.95 monthly fee.

• IBILL
  http://www.ibill.com/
  If you plan to sell intangible items like website access, downloading products, professional services, then ibill may be for you. However, they do charge a hefty 15% commission on each sale.

• CLICKBANK
  http://www.clickbank.com/
  "ClickBank has a one-time $49.95 activation fee, and a $1 + 7.5% fee per sale. There are no monthly fees."

• DIGIBUY
  http://www.digibuy.com/
  "DigiBuy is an electronic commerce solution for publishers of software, shareware, electronic art, information, and data." Setup fee is $29.95.

• I-ESCROW
  http://www.iescrow.com/
  "i-Escrow's service fee is based on the Transaction Amount and the method of payment used by the Buyer." Starting from as low as $2.50.