Payment Processing - for Online Credit Card Processing and Other Forms of Payment
Oddly enough many prospective website owners do not realise how important is this final part of their website - how does their customer pay for their purchases? - the back-end facility for processing credit cards online, and also for processing other forms of payment!
If you are new business, a bank is not going to rush to provide you with a merchant facility of any sort, let alone back-end credit card processing online. (We will discuss some solutions to this problem later). So you have a dilemma here - customers won't buy unless it is made very easy for them - and they can do it now! You will rarely get someone prepared to print out their order, write a cheque, address an envelope and then go to the post box - it defies the very basics of Internet trading! Nevertheless you will still almost certainly be handling other forms of payment processing from time to time - more on this later, too.
Payment Processing - Managing it at Your End
If, for example, you are a seasonal business, processing credit cards can become a major bottleneck; therefore a back-end facility to process credit cards transactions online is absolutely vital, especially with the growth of online purchasing. Some means of organising your payment processing is essential if you are to keep track of your money.
Within the TOPS system this is much simplified - credit cards details are batched according to when the relevant goods are to be despatched. Ideally you would process each batch on the day before the goods are being sent out. On that day you would simply 'click the button' and the batch would be processed! Of course should you have any incorrect credit card numbers or expired 'expiry dates' these would be thrown up for reprocessing. No doubt if the customers are well known to you, you would still despatch the goods and resolve the issue meantime. In fact it has now become so easy to process credit cards online - that one almost forgets to 'click the button'!
Apart from the very great time saving facility of processing credit cards online via our batch processing facility, of course, within our TOPS system we can keep track on all other payments be they cash/cheques/BACs/manual cards or auto cards - i.e. those credit card payments which have already been processed online through your web shopping cart.
Reconciliation is an essential aspect of your payment processing system. When entering an order into the TOPS system you simply put the payment into whichever is the appropriate batch, or create an appropriate batch for the date when the funds will reach the bank. We try to have TOPS synchronise with your bank statement - so when you statement arrives you can easily cross check that all is in agreement.
If yours is a business where your clients are perhaps a little older and they send you cheques, it helps if you can easily print out a list of all the cheques when you take them to the bank and attach this to your paying-in slip. TOPS can do this for you.
It gives you great confidence to see a reconciled bank statement! Should you forget to process any kind of payment within TOPS, the system will always
remind you - so you can sleep easily in your bed at night - confident that the system's maths might be very much better than yours when you are pushed for time and knowing that the TOPS batching system is foolproof and you may not lose either a payment or an order!
In order to find out how simply and efficiently our TOPS software handles credit card processing online and other forms of payment processing, please see our presentation.
Credit Card Payment Processing - Obtaining the Money
Of course, before you manage the payment processing at your end, you must have some means of collecting the money in the first place. Online credit card payment processing is one of the trickiest and most important payment processing issues for a mail order business. It is therefore this that we will tackle here.
You could go with one of a number of well-known Payment Bureaux - as an alternatives to high street banks - such as PayPal, Nochex, Protx, SECPay, Netbanx and Worldpay - a list of credit card processors and online providers which grows forever longer. Most of these Payment Bureaux do cost you more than going directly to a bank, and may require a merchant facility for them to transfer the funds into. (We fear too, some of them do not release your money back to you with quite the same alacrity as they might - they can take 30-60 days to clear). A Payment Bureau can also save you the trouble of setting up a website SSL (Secure Sockets Layer) payment processing system as all payments are typically processed through the Payment Bureau's own website.
Although for six years we have been using Royal Bank of Scotland Streamline back-end credit card processing facility, they seem to have increased their set-up fee and monthly charges to such a degree that we can no longer advise new clients to go down this route. It really cannot be cost effective for a start-up. Another money spinner for the banks is that some banks are insisting that you have a separate merchant facility if you trade online - thus leading to them requiring you to have two merchant accounts if you already have a traditional mail order business. This is a subject that is for us very much ongoing, and we always do our best to ensure that we come up with the most cost effective solution for our customers.
Therefore, as an interim measure we would advise any start-up to use Ebay's PayPal service until you can establish that is worthwhile to take on the financial commitment of a full blown merchant account. With PayPal you can transfer money directly into your ordinary account and it can be set up almost in minutes! The big advantage is that they only charge you for what you use – no monthly rental or fees of any kind – just a similar percentage to what the banks charge you normally – about 2.5% depending on throughput. Nochex are now offering terms which are similar to Paypal - no merchant account required, etc. We suggest you check out the websites of the various Payment Bureax for the most up-to-date information and use the DTI Electronics Payment Tool for cost comparisons. We feel the banks must look to their laurels!
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