How to accept payments for your products, and how to avoid getting burned. We have also included set-up details with our recommended Merchant Account service per our members' requests for this information.
Overview
Accepting payment for your products is obviously a top priority for your business. In general, you want to make it as easy as possible for your customers to transfer funds to you. The basic options available to you are checks/money orders, credit cards, Paypal, and 3rd party processing. Each is explained below in more detail.
For each type of payment, be sure to read and think about the various kinds of fraud. If you are aware of the tips and tricks, you can avoid getting burned by fraudulent buyers.
Accepting Credit Cards
Credit cards are an essential element to a successful online business. To accept credit cards, you need a "Merchant Account" with a credit card processor. There are many companies out there that can provide you with the ability to process credit cards. Many are resellers of a few central merchant account providers, such as Authorize.net, Cardservices International, FirstData (Linkpoint), and others.
IMPORTANT: When choosing your merchant account provider, look at the rates you will be charged for accepting payment. Typically there is a monthly fee for your "Gateway", which is the website you use to process transactions and run reports. In addition to this fee, there is a per transaction cost and percentage of the amount charged. You can usually find a rate in the range of $.25-.35 per transaction and about 2.5-3% of the transaction.
These transaction fees may not be appealing, but they are a necessary part of the process to make it easy for your customers to pay you.
When researching your options, it is also important to consider where you will be generating your sales. If you are using Inventory Stores for you website, there are 14 different payment processors that you can choose from. For any of those, you can easily process sales from your store with the push of a button.
TIP: Be sure to find a provider that is compatible with wherever your orders will be coming from. When you begin generating enough orders, you will want the process to be as quick and painless as possible. Our recommeded merchant account provider is Authorize.net because of their reliable service and competitive rates.
When you charge a credit card, the company accepts the payments and deposits funds directly to your bank account within a couple of days. The fees are taken out of the amount before you receive the funds, so when it hits your bank account, the cash is yours.
IMPORTANT: Be very, very aware of fraud. There are many fraudulent buyers out there with stolen credit cards that would love to steal from you. And listen carefully...it is YOU they are stealing from, not the owner of the credit card. To learn how to not get scammed, read on?
After you accept a credit card payment, a buyer may potentially request a "chargeback" from the credit card company, claiming that either their card was stolen or that they never received the product. The company will then contact you to see if you have valid records for the transaction, and if you fulfilled on your commitment to your buyer. To ensure you keep your funds, you will need to produce an invoice showing that the product was shipped to the billing address for the buyer's card. Failure to provide this documentation will result in the withdrawal of the funds from your account.
This may sound scary, but it is actually quite easy if you follow a few simple steps. The simplest step is to only ship products to the address for the credit card used for payment. This ensures that you are never at risk. When you process a credit card, you are given a series of letters, knows as AVS (Address Verification System). This information tells you if the name, billing address, and zip code that you have actually match the credit card records. If it does, and this is the address you are shipping to, you are all set!
This poses an obvious problem in the case of gift purchases and other circumstances. It is always important to start cautiously until you understand the process. When in doubt, communicate with the buyer directly to ensure they are not using a stolen credit card, and learn to spot the buyers that are obviously fraudulent. Fraudulent users will typically not respond to questions regarding the card and are not usually reachable, so if you are in doubt, be sure to check!
For example, if you get an order asking you to ship 100 units to Spain (or any other country...Spain was picked at random), watch out! Fraudulent users prey on new sellers and make offers that sound too good to be true, which of course they are. Don't get excited about a big sale and forget to ensure that it is actually legitimate and that you will get to keep your funds.
This doesn't mean that you do not ship international. Many of our resellers work from different countries, but you should pay attention to large orders. If it is also a large order and it is sent to a far off destination with a different set of laws...then this is an order that should make you careful. Afterall, if you ran a "traditional" retail business and a person called you on the phone and wated to order 30 speakers and have your rush deliver them to some back alley address, would this send off any red flags? You do not stop thinking about your orders and who you are selling to, just because you are selling online.
Accepting Paypal
Paypal is very similar to credit card processing and functions in a similar fashion. You set up your account, and then buyers can send you funds via email and through their Paypal accounts. Paypal is a very low cost way to get started accepting online payments. If you are using Inventory Stores for your website, your checkout process comes complete with Paypal payments, meaning you can easily accept payment right away.
Paypal requires similar efforts to credit cards to ensure you do not get robbed of your money. Be sure you have actually received the funds before shipping your products. Fraudulent users can use fake emails and other techniques to try to fool you into thinking they have paid you.
To avoid scams, be sure to check your Paypal account directly to monitor the transferring of all payments, rather than relying on emails.
Accepting Checks and Money Orders
Some buyers are scared of online payments, so having the option to pay by check or money order is usually a good idea. In this process, it is up to the buyer to send you payment, so you can simply hold onto the order until you receive the funds and they are in your bank account.
Be sure to make it easy for the buyer to know how and where to send you the payment.
For personal checks, it is VERY IMPORTANT that you are sure the funds have cleared and are actually in your bank account before shipping the product. This usually takes a few days from when you deposit the check. Many fraudulent users will send bad checks hoping that you will ship the product before receiving funds.
Accepting 3rd Party Payment Processors
Many marketplaces, malls, and services will allow the transaction to occur within their service. Examples of these include Amazon Marketplace, PriceGrabber, internet malls, and other 3rd party sites.
In these transactions, you will list your products for sale and they will handle the entire buying process. You will typically receive an order for which funds have already been collected. You can simply ship the order and collect your funds directly from the 3rd party. In many cases, such as Amazon, the funds will be transferred to your bank account automatically.
3rd party services are very convenient, but they usually have a very high commission on the sales and funds they process, so be sure to price your products accordingly.
TIP: It is generally a good idea to check with all of your providers for all of your payment methods to learn what tools and tips they may have about avoiding fraud.
RECOMENDATIONS:
We are often asked who we recommend for Credit Card Processing and Merchant Account services. That is why we have partnered with a Merchant Account Provider registered with JPMorganChase: E-Commerce Exchange. You want a TRUSTED Merchant Account Provider and E-Commerce exchange is an industry leader.
Accepting Credit Cards will be a core part of your on-line business. That is why Inventory Source is proud to have partnered with E-Commerce Exchange to bring you some of the lowest rates available for processing credit card transactions. E-Commerce Exchange is an Industry Leader in Merchant Services and offers the best services and support around and Inventory Source is able to provide you with reduced rates through our partnership.
Step 1- The process to get started is very easy. If you have not done so already follow this link: http://www.inventorysource.com/merchantaccount.html
Step 2- From the Merchant Account page you can complete the On-Line Application and have your account established immediately.
Step 3- If you are not quite ready and you have a few questions, simply fill out the form on the page and a qualified E-Consultant will contact you right away. If you have any remaining questions you can also Questions about the On-Line Application Process? Call E-Commerce Exchange toll free at 800.418.9285.
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