Every business that sells goods and services online requires some form of credit card payment processing. Online payment services are similar to an offline merchant account. When the purchaser enters his details online, the credit card details are passed through an encrypted gateway, authenticated and the funds are transferred to the sellers account. This seamless process is the very foundation that ecommerce is built on. To accommodate international funds transfer, a plethora of different merchant services have arisen. Each of these services differs slightly. Just what are the key types and differences in online credit card payment processing services?
PayPal: PayPal is a payment alternative that is available to facilitate transactions in a diverse range of countries and currencies. Users are required to setup an account and verify their credit card details. They can then purchase goods and services through websites that provide PayPal shopping carts. Merchants that use this service do not need to interface with a bank account. The funds are held within the merchant PayPal account and can be transferred to the merchant FFFDs bank account. If the business is conducted in a foreign currency, currency exchange rates are applied to balance transfers. The advantage of this service is that it is quick to setup and does not require programming experience to establish a payment gateway to the merchants bank account. There are no fees to setup this process and transaction fees are cost-effective for low volume transactions.
3rd Party Solution Providers: Companies such as 2checkout.com provide an internet credit card payment processing service that operates in a similar fashion to PayPal. The advantage of this service is that it supports a wider variety of credit cards. The fees are slightly higher than PayPal and merchants are required to pay a one time activation fee. Funds are held in the merchants 2checkout account and can be transferred to a bank account when required.
Google Checkout: This service is provided by Google and is available only to merchants within the US and UK. Although Google plans to expand this internationally, they have not provided any further details on where and when. The advantage to merchants that qualify is the fee free period that extends into 2008.
Bank Merchant account: Your local bank can usually provide a payment processing service or recommend an authorized solution provider. Bank merchant accounts are usually an advantage to high volume transaction businesses because the processing fees are lower. They usually charge a setup fee and ongoing monthly fee. The service becomes more cost-effective to a business after a certain volume of transactions have been reached. The downside of this option is that it can require programming knowledge to setup the online payment gateway. Unless you have an in-house programmer or use the services of a programmer, the above solutions are usually preferred by web merchants.
This is a basic summary of some common services for processing credit card payments. You can find out more about each service by visiting the respective web site.