Merchant Accounts and IDs, Payment Gateways, SSL Certificates - it all gets pretty confusing when you start looking into the various aspects of ecommerce.

First of all let’s break down the process of your customer.

• Customer visits your web site.
• Customer decides to buy an item and clicks ‘Add to Basket’ or a similar button.
• The product is then added to their Shopping Basket.
• The customer then decides that’s all they want and wish to proceed with paying for the item.
• The customer clicks ‘Go to Checkout’ and enters their personal details and payment details.
• These details are then transmitted to a Payment Gateway service. The gateway service securely routes the information through the relevant financial networks.
• If the transaction is successful, the customers’ credit card account is debited and your merchant account is credited.
• Once all funds have cleared, you are then able to transfer money to your ordinary business checking account.

Payment Gateways

However you want to approach ecommerce you are going to have to have a Payment Gateway, there really is no getting around it. We recommend ProtX as they have some excellent rates.

In more detail a payment gateway is a separate service and acts as an intermediary between the merchants’ shopping cart and all the financial networks involved with the transaction, including the customers’ credit card issuer and your merchant account. Think of it as a EFTPOS terminal in cyberspace. It checks for validity, encrypts transaction details, ensures they are sent to the correct destination and then decrypts the responses which are sent back to the shopping cart.

Merchant IDs

Some Payment Gateways will also come with a Merchant ID. PayPal is probably the most famous of these types of gateway. If you don’t want to use PayPal then another option is WorldPay, however, WorldPay have very steep fees and also a set-up fee. If you want to go down the route of getting a Merchant ID from a bank then be prepared to wait, and then wait again. Banks are notorious for utilising poorly trained salespeople rather than those with hands-on product knowledge or an understanding the complexities of ecommerce. Make sure they explain all charges to you thoroughly by enquiring about the following rates:

• Statement - the charge each month for issuing you statements on all transactions.
• Application fee - some institutions will charge you for the privilege of applying for an account, regardless of whether your application is successful or not.
• Setup fee - once your application has been approved, there may be other fees associated with establishing the account.
• Discount Rate - a percentage deducted for each product sold. Also known as the Discount qualified rate.
• Mid-qualified and Non-Qualified rate - A higher rate for transactions that don’t qualify for the discount rate.
• Usually applied in circumstances where AVS is not checked or the card is keyed in by the merchant.
• Transaction fee - added to the discount rate, a flat rate on each transaction.
• Monthly Minimum - what you will be charge regardless of the level of sales each month.
• Reserve - some providers require you to maintain a certain level in the account to cover chargeback fees.
• Chargeback - the killer fee which see you being charged per fraudulent transaction (which includes any client disputing a transaction successfully).

SSL Certificates

Another optional side of selling online, the SSL Certificate essentially creates that little ‘padlock’ you see on web sites. It lets visitors know you are secure. Fortunately, a lot of Payment Gateways will sort this out for you, as long as your happy with your customer inputting their credit card details on the Payment Gateway’s web site. Payment Gateways will let you brand this page but it is normally restricting.

In more detail a secure certificate is a document used to certify that an individual or organisation is who they say they are. A certificate exposes to the public the true company name and full web domain name that the certificate is registered to and carries with it both creation and expiration dates. A secure certificate transmits data on the Secure Socket Layer (SSL) which encrypts the data using very long decryption strings and other encryption technology.