It’s a lot easier to just whip out a card and charge it, versus get the checkbook out, try to find a pen, write the check out, and heaven forbid you don’t have your driver’s license on you!

There are many ways you can accept credit cards online. It is not, unfortunately, as simple as it sounds. There are many factors to consider. What is your target audience? Are you shipping tangible product, or a downloadable product? What do you want to spend? What kind of sales volume are you expecting? Hopefully this article will help you make a more informed decision.

First of all, let’s set some definitions. There are 2 main ways to accept credit cards on your website. One is through a third-party payment processor. An example of this is PayPal or 2Checkout. The payment engine is on their website, and your control over many aspects of the transaction will be limited. The other method is a payment gateway linked to a merchant account you hold. An example of this would be Authorize.net linked to your business bank account. You have complete control over how to accept payments, but there are a lot more things you have to do to ensure the quality of your visitors experience and transaction security.

Let’s examine some of these methods.

First, lets compare the pros and cons of a traditional merchant account versus a third-party processor.

Merchant Accounts: Generally have monthly fees. Can be harder to get, as you have to often pass credit checks. May require some programming to get them to work with your site. Portray professionalism – your name is on the statements. Are better if you wish to accept credit cards offline – face to face or over the phone. Deposit funds within 1 to 3 days, typically Are generally direct accounts with Visa, Mastercard, American Express, etc.

Third Party Processors: Often have no monthly fees. Usually charge a flat per transaction fee plus a percentage of each transaction. Don’t usually allow custom shopping experience – the customer leaves your site to pay. Often have other features built in, such as affiliate programs. Hold your money for up to a month. Are often geared towards selling downloadable products. Often have built in affiliate marketing programs.

I mentioned PayPal and 2Checkout earlier. Some other services are Clickbank, PayDotCom, SaleFlurry, WorldPay, iBill, Google Checkout, and many more. We’ll examine a few from the above list: PayPal, 2Checkout, Clickbank, PayDotCom, and SaleFlurry, as these are services I use and am quite familiar with.

PayPal:
PayPal is a great way to accept payments for digital and tangible goods. There are quite a few shopping cart software packages that can integrate with PayPal, or you can just copy and paste a few lines of code into your site to make a “Buy Now” button. Advantages of PayPal – easy to use, no signup fee, widely used and they’ve been around for a while. The disadvantages are the fact that PayPal prefers that you be a member to purchase someone’s product or service. You don’t HAVE to be, but they “urge” you to be. They also hold your money until you withdraw it. PayPal can support both digital and tangible products.

2Checkout:
2Checkout is one of my favorites. They deposit money within a few days to your bank account. Many shopping carts also integrate with 2Checkout. Their fees tend to be the highest, but they are also pretty easy to use, and I feel they are the closest to having a real merchant account without having one. 2Checkout supports both Digital and Tangible products. There is also a 49 dollar signup fee.

Clickbank:
Clickbank is a favorite among internet marketers. They have a built in affiliate program and a marketplace to sell your product on. They only support digital products, and you can only have one sales URL per account (although you can have many products on it). They also have a price cap on products. They pay by check every 2 weeks. There is a signup fee of 49 dollars.

PayDotCom:
PayDotCom is a newer processor, created as a competitor to Clickbank. They are similar in that they have a built in affiliate program and an online marketplace. PayDotCom could be considered a front end to PayPal, as payments are deposited into a PayPal account. There is no signup fee, unless you want to sell multiple products, and then it is a one time 29 dollar fee. They allow Digital and Tangible products.

SaleFlurry:
SaleFlurry is a brand new service that just launched in July of 2006. It has an affiliate program, and integrates with PayPal as well. SaleFlurry is unique in that if you have a traditional merchant account and an account with the payment gateway Authorize.net, you can accept payments that way. Signup is free, and transaction fees are a flat 1 to 3 dollars per transaction.

Google Checkout:
I am mentioning Google Checkout because it is new, and it’s from Google. Signup is free, plus you get credit towards your AdWords account if you sell product through Google Checkout. At this time, it only works with Tangible goods. But, hopefully Google will change that soon.

I’ve gone over some of the more popular third party payment processors above. So, what if you want to completely integrate payments on your website? Or, you don’t want to have to send the buyer to another website to pay, and then return to yours? What if you need to accept payments by phone or in person?

It’s time to look at the traditional Merchant account.

A Merchant account is typically used with brick and mortar businesses. The credit card swipe terminal is the front end. When the card is swiped, the information is communicated to a payment gateway, such as Authorize.net, and then money is deposited from the sale to your bank account through the merchant account. I know, it sounds rather confusing. Merchant accounts and payment gateways don’t usually come together in a neat package either. You need to talk to your bank about turning your business account into a merchant account, then set up with a payment gateway to get your terminal set up (either the physical swipe terminal like a TelXon or Verifone unit, or an online virtual terminal where you enter the card information into a computer).

When I set up my merchant account, I was not up to speed on all the monthly costs and what I’d pay up front. Plus, at the time I had no idea how to integrate it with my website. I called quite a few places for information, but the most helpful was Charge.com. They don’t charge the signup fees or virtual terminal fees that others charge. So, if a traditional merchant account is your cup of tea, Charge.com is the best place to start.

Shopping Cart Software

There are literally hundreds of different shopping cart software packages on the market. Some are free, others can run up to almost a thousand dollars. There are pros and cons to using shopping cart software to accept payments. First of all, most software of this nature can accept payments through several sources. One such package, OSCommerce, can accept payments through PayPal, 2Checkout, and Authorize.net – making it very flexible.Most Shopping Cart software packages have an “out of the box” design scheme, and it is often difficult to create a custom design to integrate with your existing site’s design. There are often plenty of “plug in” templates available to change the basic look and color combinations, but heavy customization would most likely require the services of a developer who is familiar with a particular package and could customize the look to suit your needs. All in all, having some sort of Shopping Cart software is advantageous if you are selling a large variety of products and shipping them – most of these packages can also integrate with FedEx, UPS, and USPS for your shipping needs.

There are many ways to accept credit cards on your website, and I’ve covered many of them here. Ultimately, the decision is yours. Take into account what you are selling, the prices of the products, how many sales you expect, and how good you are at web development.

That wraps up this overview. Thanks for reading, and I hope that you have gained enough basic knowledge to know what will – and won’t – work for your business needs!