Secure Payment Gateways - Application -

2 Types of Payment Gateways

by Michelle Newman     Imagine this. You are an amateur photographer with a cheap point-and-shoot camera. You take pictures of mundane objects that strike your fancy. After some time, you acquire a sizeable collection of pictures. Now, you can make money out of this hobby. You get a website, upload all your photos in there and sell those digital pictures online. Someone who browses your site and likes certain digital pictures displayed on your website will simply click the chosen photos. An online form will appear where he/she will key in her credit card and that's it. The amount is deposited in your account in just a few days.     But wait. The above scenario is not as simple as it sounds. As an online merchant, you need the payment gateway system. This service allows a secure site for customers to key in their credit card information to complete the purchase transaction. Without payment gateway, your online store can not possibly make any sales. TWO KINDS OF PAYMENT GATEWAYS     There are two kinds of payment gateways. One requires you to have a merchant account. The other does not need any merchant account. <ol><li>PAYMENT GATEWAYS THAT REQUIRE MERCHANT ACCOUNT Basically, you need to apply for a merchant account at your local bank or at any third party companies that offer this service. Then and only then can you avail of this payment gateway service. Benefits: a.) You get competitive rates. For illustration purposes, let's just assume that the payment gateway company will charge you with only a fixed 1.5% discount rate, a fixed $ 0.18 or so for each purchased item, and an affordable bundled monthly payment gateway. In other words, you keep most of the profits. b.) The name of your company will reflect on the credit cards of your customers which means less disputes. </li></ol> <ol> c. Built-in shopping cart integrated into your website so that customers will not be redirected to some unfamiliar websites. This facilitates smooth user experience.</ol> <ol>Disadvantages: a.) Setting up for this kind of payment gateway takes time-- from three weeks to six weeks at the most. It means you will have to wait before you can conduct business online. b.) You, as a merchant, should implement secure transaction protocols in your website to prevent fraud. c.) You can not process some types of credit cards</ol> <ol><li>PAYMENT GATEWAY THAT DOES NOT REQUIRE A MERCHANT ACCOUT As we've discussed in the above, let's assume that you are an amateur photographer who wants to sell digital photos online. Payment gateways which do not require merchant account has some distinct advantages. Benefits: a.) You get to sell immediately, no fuss whatsoever, and no waiting time for application service approval. b.) Payment gateway company installs strict fraud detection protocol for you c.) Your provider simply gets a percentage cut for each purchase transaction. Disadvantages; a.) You have to pay a high commission rate that ranges from 6% to 15% for each bought item, plus a fixed $0.90 per transaction. In other words, your provider is getting a significant amount from your revenues. b.) The payment gateway's company will reflect on your customer's credit card billing statement and not yours. Since your customers do not recognize the name of the company, they usually dispute the charges. These oftentimes result in costly chargebacks. </li></ol>       Examine each of the payment gateways and choose one that fits your present budget and business. ( Michelle Newman is the CEO of a leading Fortune 500 company based in San Francisco. She lectures on various business topics like marketing, competitive business strategies, and management-related issues. She does some business writings on her spare time.)<a href="http://www.onlywire.com/submit?u=http://www.securepaymentgateways.com/2_types_of_payment_gateways.html;t=payment%20gateway;tags=payment%20gateway%20target=" title="Add this Article to Onlywire"><img src="http://www.onlywire.com/i/onlywire.ico" alt="" />Add to Onlywire!</a>

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