Since e-commerce is usually at the heart of an online business, let's go into some more detail about the tools required to make it happen. Basically, if you want to sell products and collect payment electronically, you're going to have to have:
- a merchant account -- an account that lets you collect payment via credit card
- software to collect information -- shopping cart programs
- software to process the transaction and send information to all of the involved parties (your bank, their bank, etc.)
- a secure server -- SSL (secure socket layer) will encrypt the data and send it to a secure server where it can't be intercepted by a third party.
A Merchant Account allows you to accept and process credit card payments either manually by "swiping" or "keying in" a card number, or through your web site. There are many charges associated with accepting credit cards including:
- a "discount rate" -- usually a 1-4 percent charge based on the sale amount (although online rates can be much higher)
- a transaction charge -- a $.20-$.40 charge per transaction
- a monthly minimum charge -- a flat rate that is charged if the minimum is not met
- a "statement fee" -- a monthly fee charged regardless of the amount of charges in a month
- setup fees
- application fees
- batch header fees -- fees that are charged for a batch of transactions, usually every time a terminal is closed out. Some systems automatically "batch out" at the end of the day and you may be charged whether you had any transactions or not!
- and... there are also a few fees for special circumstances.
If you don't plan on accepting credit cards then you don't have to worry about a merchant account. On one hand, with the increase in credit card fraud you may be saving yourself a lot of headaches by not accepting credit cards. On the other hand, some statistics say that you will be turning away 80 percent of your sales by not accepting credit cards. It really comes down to what you're selling and how you're delivering it. If it is a service that must be delivered then you may do just as well (and save money) by invoicing and requesting payment by check, wire transfer, or money order. If you're selling products directly on-line then you probably need to go the merchant account route.
If you have had problems getting a merchant account, you can also try going through an Independent Sales Organization (ISO) for electronic funds processing. These firms usually provide many options for transactions both electronically and in-person. Concord EFS is one vendor, but many others exist.
Manually Processing Cards
If you already have a brick and mortar business that accepts credit cards then you can simply take the credit card information and process the card manually using your existing merchant account. No special account is necessary for web transactions. Processing cards manually gives you the added advantage of being able to hold the card information and charge the customer when their purchase actually ships. Remember that if a product is not able to be shipped within 30 days of the order you must notify the customer of the delay. Most people don't like to be charged for something they haven't received yet and automated card processing on your web site will do just that. The card is processed and funds are transferred within hours or a few days rather than when the order ships.
Other Payment Options
There are also other alternatives like Paypal and Propay that let you set up accounts to accept payment from customers without having to have a merchant account. There are still charges and limitations, but these may also fit your needs and are worth investigating.
One thing to keep in mind too is that in order to accept American Express or Discover you have to go directly through them.
Electronic checks can also be accepted with the right printing software and validation programs. Your customers would input their checking account and other identification information and you would print the check on blank check stock and deposit it as you would a written check Yes, this is legal. According to Uniform Commercial Code, Title 3, a customer can authorize you to endorse a check on their behalf. You'll also need to authorize the check using national databases that look for bad payment histories, bad checks, stolen checks, etc. Vendors usually offer features that will help you collect for non-sufficient fund (NSF) checks as well. PayByCheck offers these features, as well as several other vendors.
Shopping Cart Software
Let's assume you now have your merchant account -- or alternative method of processing payments. Now you have to have a way to let your web shoppers select the products they want, preview the sale amounts, delete items they change their minds about, enter in their payment and shipping information, and then cancel the order completely. (OK, hopefully they won't do that last part.) Having a good shopping cart interface is very important for a good e-commerce-enabled web site. The easier and more intuitive you make it for your shoppers the more sales and the more repeat business you can have.
So how do you get that cute little shopping cart icon and "order me" button on your site? Well, you could pull out the Cold Fusion books and set aside a few months to code it yourself, or you could leave that fantasy world and get an off-the-shelf shopping cart program. I highly recommend the second option for several reasons. First of all, unless you're a programmer (or have good friends who are) it's going to cost quite a bit more, in terms of your time being money and all, to put together the code to do the job. Second, there are so many good programs out there now that have been proven and debugged over time that it just makes more sense. And third, you can get a lot of features for not a lot of money. Now don't get the idea that we're affiliated with any of these off-the-shelf companies-- we're not. I just recognize a time saver that's worth the money when I see it!
So what features do they have and what do you look for? Ready-to-go shopping cart programs usually offer simple template- or wizard-based tools to set up the ordering functions the way you want them. Most will also give you enough creative license to make the ordering pages have the same "look" and "feel" as the rest of your site, and then all it takes is cutting and pasting the generated code into your own html pages. Also look for:
- SSL (secure socket layer) capabilities
- interactivity with online authorization services
- shipping calculators -- some also offer real-time shipping links
- business administration tools for managing the sales cycle
- management tools to manage your store
- merchandising features that let you cross-sell more products
- inventory tracking functions
- product maintenance and categorizing tools
- order reviewing and confirmation tools
- sales tax calculators
- capabilities for selecting various product options
- e-mail order notifications
- help functions
- search functions
- discount functions
- frequent-shopper-point functions
- price variation capabilities based on product option choices
- database importers for the programs you are using to set up your product databases (e.g.. Microsoft Excel, Access, or even ASCII formats)
You may also find products that offer:
- web-based administration tools that will allow you to administer changes from anywhere
- tools to set up shopper groups to allow you to run specials for select customers
- vendor maintenance tools if you distribute products from different vendors
- editing capabilities for their pre-set templates
Here are some things to remember:
- Watch for products or services that take the shopper away from your site.
- Check out the support services and user documentation.
- Visit some sites that are currently using the product and test them out. (Talk to the store owners if possible.)
- If you are designing and building your own web site, also check on development components for programs like Microsoft FrontPage or Macromedia Dreamweaver, or whatever program you are using to build your site. (Having these specific components makes integrating the shopping cart code with your site much easier.)
- Check on system requirements and platform compatibility -- if your site is being designed on a Macintosh system then it might help to have the shopping cart software compatible.
- Check out the payment services the program is compatible with such as Authorize.net, Cybercash, SurePay, etc.
So as you can see, there are many features to look at and compare so know your needs before you tackle it. Some programs out there to look at include: BugMall, PDG Software, and SoftCart by Mercantec (actually more of a full-site development tool).
A Simplified Solution: Using Third-Party Vendors
Another is option is to use a vendor who includes everything you need to get your online business started. This is certainly a more painless way to go than designing and developing everything yourself and then hoping all of the elements will work together happily.
There are some reputable companies that offer these types of services, and many will include not only the web site design, shopping cart software and merchant account, but also they will register your domain name(s) and host your site for you. Others provide templates and wizards that let you build your site yourself without having to know HTML coding. They include integrated shopping cart software that ties in with an included merchant account.
If you decide to go this route, keep these things in mind:
Some vendors include:
When comparing vendors, go to some of their clients' sites and see how the shopping cart interface works. Go through the ordering process and see if you like the way it looks and feels. Be sure to visit several stores from each vendor to make sure you're getting a good representation of the features.
- watch out for hidden fees
- make sure you've read and understand all of the terms
- make sure you don't have limitations to how you design your site.
- check on importable file formats (like Microsoft Excel spreadsheets for product databases)
- compare different vendors!
Look at the variations of site layout and decide if the ideas you have for your site will work. You typically don't have the flexibility in design with templates and wizards that you have when you design your site the old fashioned way! There may also be limitations in size, database capabilities, etc. Take your list of site functions to the proposed vendor and see if they can accommodate your needs.