In trying to set up my payment gateway tonight so I can begin accepting credit card orders on my web site, I learned that while you are required to collect every customer’s CVV2 number (the three-digit one on the back of the card), it is illegal to store it in any way for any length of time. I verified this right here on page 12 of Visa’s Merchant Rules document.
Well, it happened about a week later than I wanted it to, but I have finally chosen Thompson Merchant Services to process my credit cards. They were neck and neck for a while with WaMu’s TransFirst merchant services, who cost a little more but provided excellent service and assistance during the sales process. They both offer competitive rates on a package that includes a gateway, a merchant account and a virtual terminal. They both respond to questions and submissions quickly. The deal-breaker was the SSL certificate.
Thomas’ NexCommerce gateway, run by Authorize.net, comes with SSL encryption built in. For those of you who did not read the previous merchant services posts, an SSL certificate is a safety wrapper you buy for your web site so that identity thieves can’t steal your customers’ personal info when they buy things from you online. TransFirst’s Transaction Central requires that you purchase your own SSL certificate, which is pretty standard. Normally, this is not a big deal. GoDaddy can provide you with one for $20 a year or less, depending on how many years you buy up front (and their 24/7 customer service is second to none). The problem is that my web site is just one subdomain in a web hosting package my fiance and I use for all of our various web projects. In other words, our main domain is my fiance’s design business, www.burning-house.com, and my Sweet Meats web site is actually located at meat.burning-house.com. The domain name www.sweet-meats.com just points you to that meat folder on the burning-house web site.
So, back to my gateway issue: an SSL certificate can only be added to the main domain of a hosting package (the burning-house.com one), which means that I would have buy another web hosting package and move all of my Sweet Meats files over to a new server. I just don’t have the time or the money for that right now.
NexCommerce will not set up their gateway for you unless you have a few things on your web site first:
- Customer Service number or email.
- Return/Refund Policy (including “no refunds” if this is the case).
- Website Secure Order Page along w/shopping cart (order page doesn’t need to be functional yet but must be present)
- Delivery Method and timing are clearly stated (like “Products are shipped 24-48 hours after receiving your order via UPS Ground, Fedex 2nd Day”, etc.)
In order to properly compare merchant service providers, you need to know exactly which services you need. Here are some possibilities:
Merchant account: a place to put the credit card money you earn until it is approved and transfered to your bank. If you accept credit cards at all, you need this. There’s a link to a great diagram of this process in the previous merchant services post.
Virtual terminal: a web site where you key in credit card info your customers provide to you by phone, mail, or in person using a credit card imprinter and carbon receipt. If you don’t need to process your customers’ cards right away, either in person or online, this is a good option for you.
MOTO processing: “Mail order/Telephone order” processing is like a virtual terminal, but you dial in the information on a telephone rather than enter it online. Very often you can use a cell phone for this to get instant approval, though it may cost you extra.
Payment gateway: software that allows customers to enter their credit card info directly on your web site. Using a gateway requires a shopping cart as well.
P.O.S. processing: “Point of Sale” processing requires a swipe-able terminal (usually costs extra to rent or buy) that processes credit cards instantly. This is what you would use if you had your own brick-and-mortar store. It requires its own phone or wireless connection to operate but your per-transaction fees will be a lot lower than if you process cards later using a virtual terminal or MOTO processing.
Shopping cart: software that allows people to find, choose and submit products to order. This, on its own, cannot process payments.
SSL certificate: “Secure Socket Layer” protection for your web site. Puts a protective shield around your web site so people cannot see your customers’ sensitive information as it is transmitted. Some payment gateways come with SSL protection included.
If you only sell things occasionally online (through Etsy, for example), you should go with a service like Paypal or 2Checkout’s standard services. These are all-in-one solutions that include a merchant account and shopping cart wrapped up neatly in one package. The pros of using an all-in-one processor are that they are simple to set up and charge no monthly fees (I heard a rumor that Paypal charges smaller fees if your products cost less than $5 apiece, but I can’t find confirmation). The cons are that they take a bigger percentage of each sale than most other merchant service providers, and your customers have to pay on a Paypal or 2CO web page; they cannot use Paypal or 2CO’s gateways to pay directly on your web site. I currently use Paypal with a Mal’s free shopping cart for my online retail orders. For whatever reason, some people are uncomfortable with using Paypal to pay online (even though you don’t need a Paypal account to use it) and I lose about 10% of my business as a result. So far, the amount I lose in sales is still less than the cost of using a different merchant service provider.
If you mainly sell things at craft fairs, through the mail, and/or on the phone, and you do less than $3,000 in business per month, you would want to go with MOTO processing or something like Propay. Propay provides you with a merchant account and a virtual terminal. Their annual fees are significantly less than most other companies’, but they don’t provide a payment gateway. You have to buy Paypal’s Payflow gateway to sell things online.
Now that I’m starting to sell wholesale, I need to be able sell products directly through my web site, to take credit card orders at trade shows, and to allow people to order by phone or by mail. I therefore need a merchant account, a payment gateway, a shopping cart, SSL protection and a virtual terminal. My wholesale customers always receive their products shipped at a later date, so if a transaction is denied, we can resolve it before any goods arrive. I therefore don’t need any form of instant processing, either through a P.O.S. terminal or a cell phone.
The shopping cart I’m using for my wholesale site is Zen Cart. It’s free, open source software, which means there are a lot of online forums and documents, but no nifty 800-number you can call for support. It’s complicated as hell for a programming novice, and I’ve seen a lot of Zen Cart sites that look exactly the same because it’s too hard to figure out how to customize. Luckily, I have a fiance who’s pretty good at this stuff, so so far it’s working out for me.
For all the other stuff, including a full breakdown of the types of fees you can expect, I’ve made a nice little chart in Microsoft Excel for you. In it, I have compared the four different merchant service providers who gave me a knowledgeable person to talk to and could provide me with competitive rates for all the services I need. I didn’t include any P.O.S. info (sorry, don’t need it for my own business), but it’s all equation-based, so you can change around the sales numbers in lines 2-11 to see how the costs go up or down. You can also copy and paste any column and put in numbers for other service providers you research yourself. The formulas should remain intact.
Right-click (or control-click on a Mac) on this link and save the file to your computer. You can then open it in any spreadsheet program you’ve got. Hope this helps those of you out there who don’t know your POS from your MOTO.