More than 80 percent of the U.S. population regularly shops online. No matter what type of business you run, whether you have a brick-and-mortar location or a business that only exists virtually, you must be able to accept and process online payments. If you do not offer a way for your customers to make online purchases or payments, you may be leaving a lot of money on the table.
The ability to accept online payments benefits your business and your customers. It is easier and more convenient for your customers to make purchases online and if your online payment process offers a good user experience, then they are more likely to turn into repeat customers. Online payments benefit your business by speeding up the payment processing, often resulting in your business receiving payments immediately. You can also use online payment processing to set up convenient recurring payments for memberships and subscriptions, saving you the trouble of invoicing and collecting payments yourself.
Offering your customers the ability to make online payments for your products, services, subscriptions, memberships, etc. can increase your revenue and incentivize your customers to return. In this guide, we will cover the steps you need to take and what to consider when setting up online payment processing for your business.
Open a Merchant Account
The first thing you need to do to accept any form of payment is set up a merchant account with a merchant service provider. Merchant service providers like First MCS work with businesses to set up a merchant account which is the account that holds the money customers pay until the transactions are cleared and the money is transferred to the business bank account. They also provide the equipment and software needed for businesses to accept in-store and online payments and they can help businesses prevent and respond to chargebacks.
Merchant service providers help businesses of all types set up online payment processing, including online stores and portals that take recurring payments.
Understanding the Types of Online Payment Processing
There are a few main ways to accept payments online. Credit card payments are the most common type of payment made online, but not all online payments must be paid with a credit card. Your merchant service provider can help you choose which of the following ways to accept online payments is best for your business:
- Online credit card processing: This online payment processing option is best for businesses with an online store or that receive customer orders ahead of time. There are usually transaction and point-of-sale (POS) software fees involved, but this is the most common way that people make online payments.
- Online invoicing: Online invoicing is used by businesses that offer services or that sell products to other businesses. Through your merchant account, you can set up online invoicing that is sent directly to customers and they can choose to pay a number of different ways, including through a bank account or with a credit card. Many customers do not pay their invoices right away so your business may wait a little longer for the payments to hit your account.
- ACH transfers: ACH transfers can be used by businesses that accept one-time lump sum payments. While ACH transfers do have fees, the fees are often lower than credit card processing rates.
Online Payment Processing Costs
Once you have set up your merchant account and worked with your merchant service provider to determine the type of online payment processing you need, you must choose a payment processing pricing model that works best for your business.
- Interchange-plus pricing: With this pricing model, businesses pay the fees charged by credit card companies as well as the fee from the payment processor which is typically a percentage of the transaction. The fees fluctuate depending on the current fees of the credit card companies as well as whether the transaction is done in person or online. Savings from low interchange rates are passed on to the merchant. Businesses can also get discounts with a high volume of transactions which makes this model ideal for high volume businesses.
- Flat-rate or blended pricing: With this model, your business pays the same flat rate for every transaction, no matter the amount or type. The consistent rate makes it more convenient to predict costs, but interchange savings are not passed on to the merchant.
- Subscription-based pricing: Subscription-based pricing is the most affordable option for high-volume businesses in which you pay interchange fees, a monthly subscription fee, and a charge per-transaction. The monthly fees tend to be lower than markups in the other pricing models, but subscription-based models may also include additional charges such as setup, annual, and equipment lease fees as well as early termination charges.
Choosing a Payment Gateway
Your payment processor can help you choose and implement a payment gateway that allows your business to accept online payments. A payment gateway is the part of a merchant’s website where customers can enter their credit card information to complete the check out process. The payment information is then sent to the payment processor for authorization to complete the transaction. During this process, the gateway keeps encrypted customer data secure.
The following are the two main types of gateways that can be used to accept online payments:
- Separate payment gateway: With this type of gateway, customer credit card data is sent to a third party and customers are also sent to the third-party website to complete the transaction. Once the transaction is complete, the customer is redirected back to your website.
- Built-in payment gateways: These gateways are integrated into your platform so customers can complete online payments without leaving your website. This gives businesses more control over the purchasing process.
Your merchant service provider can help you determine which payment gateway best suits your online payment processing needs and budget and implement the software so you can start taking payments.
Set Up Online Payment Processing with First MCS
The ability to accept and process online payments benefits your business and your customers. Your customers will have a convenient way to pay for your products or services which allows you to expand your business and encourage repeat customers by providing a good user experience. If you are ready to begin accepting online payments, talk to our professionals at First MCS.
First MCS is a merchant service provider that can help businesses set up their online payment processing. We can help you determine the best type of online payment processing model and gateway that best suit the needs of your business and integrate it into your First MCS merchant account. You will be able to start accepting and processing online payments right away.
Call First MCS at (866) 673-3099 for more about how our merchant account services can help your business accept online payments.
