POV - How I set up online credit card processing

August 05, 2019

Note: With the vast array of available options, researching, choosing, and setting up online credit card processing services can seem like an overwhelming task for any type of merchant. Following is a fictitious first-person example of how the experience could look. This story details the process for a business that has a custom website. For businesses using a template website, payments are often included in the overall package. 

My story

After a long, frustrating, and unsuccessful search for a high quality, durable, affordable, and super bright light for my mountain bike (yes, riding at night is a thing), I decided the market was ripe to go into business selling the lights online. I had always wanted to start my own business and figured I may as well go with something in an industry I felt passionate about.

As luck would have it, I found a great supplier that could private label the perfect mountain bike lights at a great price. A friend who worked in advertising helped me come up with a business name and logo for my new business. We designed a custom website and put together a marketing and SEO plan.

The last thing I had to figure out was how to accept credit card payments on my website. I thought it would be easy to set up credit card processing online, but it turned out to be a bit more complicated. Now that I’ve done it, though, I realize it didn’t have to be so difficult. I hope others can learn from my experience and have a much easier time.

Starting point: merchant services

I began by researching how to accept credit cards online. The first thing I learned is that I needed a merchant services provider to help manage the entire transaction process. Merchant services are often provided by a payment processing company that helps with everything from getting set up to accept customers’ payment information, to managing the transaction with an acquiring bank and communicating with the credit card associations and customers’ issuing banks to approve the transaction. And finally, making sure I’m paid for the credit card transactions.

Payment processing features to look for

Next, I began looking into the different payment options and what I should implement when I set up online credit card processing. I had no idea there were so many choices.

I did know that I wanted to be able to accept all types of cards, including Visa, Mastercard, American Express, and Discover—and debit cards as well. I hadn’t thought about it before but I definitely wanted to accept checks, and ACH payments, which allow customers to enter their bank account information and make an electronic payment. I noticed a lot of the online businesses in the bike industry accepted  mobile wallets like Apple Pay, Android Pay, and Samsung Pay, I figured I needed to be able to accept those mobile wallet payment types too.

I also wanted to be able to accept recurring payments, because I planned to expand my business in the future to offer items that bicycling enthusiasts would want to purchase on a regular basis. The first category would be food items like energy bars, energy gels and chews, and drinks. I also planned to create a “membership” club in which customers who paid a small monthly fee would gain early access to new products, and “member-only” discounts. Recurring payments would be the engine to power both these offerings securely and automatically.

Additionally, I wanted to be able to accept payments from consumers around the world. I knew that bringing my business online would expose it to a much larger customer base— but also more competition. I figured that having an international payments acceptance solution that allowed customers to pay in their local currency using their preferred payments brand would be one way that my business could stand out— and make more money.

The customer experience was on my mind. I wanted to be sure that the checkout page on my website was super user-friendly, so I needed the right shopping cart. I also knew that if I made the checkout process efficient, responsive, and frictionless as possible, there would be less likelihood of shopping card abandonment.

When comparing shopping card providers, I had a long list of questions regarding their best practices, like, do they offer a guest or returning checkout option? Do they include a “save for later” feature? And, will the checkout page match the look and feel of my site?

Lastly, I wanted to find out how quickly I would be able to access funds from payment processing transactions— because like with most startup businesses, ensuring consistent cash flow is key. I knew that accepting card payments could be faster than accepting cash or checks, which require time and manual effort to deposit. The good news is that I found out that some processors offer funding as quickly as the same day— even better than I expected.

Throughout my research, another thing that stood out was the importance of payment security, both to help customers feel their information is safe when making an online purchase, and to help reduce my risk of data theft and fraudulent transactions that can lead to chargebacks and damage to my business’s reputation.

I learned about fraud and data protection technologies such as payment tokenization, a process that substitutes a “token” for customers’ data which renders the data useless if stolen. I found out about point-to-point encryption which encrypts payment data to protect it throughout the entire transaction.

I read about virtual terminals that allow me to use my computer like an in-store terminal to process credit card sales over the phone or when I go to a trade show. And if all that wasn’t enough, I found out I could offer gift cards and loyalty or points programs on my website. All of these features sounded great. The question was, what would they cost and how in world would I implement them?

Choosing a payment processing company

While I was considering all of these features, I needed to find a payment processing company to help me out—and that is where it got a bit challenging. There are many companies that offer merchant services, and many seem to offer the same services at similar prices.

I quickly discovered that I have two options in setting up online credit card processing: via a direct payment provider, or via a payment gateway. Payment gateways make it possible to process payments without implementing all of the necessary software, hardware, servers and security protocols for payment processing with a direct payment provider.

I found out that gateways are particularly useful in eCommerce because they enable access to payment functionality and services that some website hosting vendors don’t offer. Since not all gateways connect to the same providers, it was important to ensure that the hosting service I end up with has the gateway to access the payment provider I want to work with.

But I also learned that using a direct solution may save me money, since gateway providers and payment processors are likely to have separate fees. Additionally, having one provider and point of contact can simplify technical support and save time figuring out which company is responsible for solving the problem. Plus, direct payment providers typically offer additional flexibility and customizable options as well as built-in, value added features like transaction reporting and customer service.

Still, since I was looking for a more turn-key payment solution, a payment gateway seemed like the most convenient option. But, on the other hand, I had plans to grow my business. Maybe in the future, I would want the greater options a direct provider offered.

Furthermore, I wanted a processor that could accommodate my business if I ever decided to open a brick-and-mortar location, in addition to my online store. It turns out that this isn’t as big of a deal as I thought, and many direct payment and gateway payment providers offer solutions for both instore and online credit card processing.

I continued my research and talked with other business owners I know who have credit card processing. The consistent message I heard was to focus on these important features: the advanced payments technology to facilitate quick transactions, great customer support, robust payments security solutions, ways to control chargebacks and other potential costs, and fast payment transaction deposits.

By focusing on these attributes, I narrowed the list of potential providers to just a handful. Then I talked with each one to find out if they could provide the services I wanted. I made my final decision based on how comfortable each provider made me feel in their ability to help set me up to accept credit cards, to provide training and ongoing support, and to make sure I was paid fast for card transactions. I also asked each company for references and learned a lot by talking to their clients, especially about the quality of their customer service. This process was super educational and helpful in making my decision.

How I set up my online payment processing

This was the easiest part. The payment processor I choose sent me an application to complete. I needed to provide information like how much I thought I would sell each month and the amount of each transaction. I also had to submit some basic business information such as my business legal and DBA name, contact info, business license, and a voided check, as well as my personal contact information.

Because my business was new and I did not have a track record of accepting payments, I also had to provide some personal financial information and sign a personal guarantee. That was it. My application was reviewed by the processor’s underwriting team and in about a week, I was approved and able to start accepting payments on my site.

What I learned about how to set up a merchant account

While the process of signing up for merchant services to process credit cards online may seem daunting, it actually isn’t that difficult. In fact, now that I’ve done it once, I’d say it’s a pretty simple.

One thing I would do differently though, and would recommend to others in the same position, is to begin by looking for a good payment processor. A good processor can serve as a consultant, helping you learn how payment processing works and determine the best investments in features.

This process really worked for me, as my online payments solution is working seamlessly. Without the distraction and hassle of dealing with technology I’m not too familiar with, I’ve been able to focus on keeping up with customer demand for my products, and coming up with new ones.