I get asked the question all the time “how do I collect payments online?” or “how do I sell something online and get paid for it right away?”. Generally I explain the following for a customer that is interested in diving into the world of eCommerce or online payments of some sort. Regardless of what you plan to do online such as sell something with an online store, offer an online bill pay for your customers, or something completely custom, the basic components and questions still apply in just about every situation. They are the following:
1. Determine what it is you are ultimately trying to accomplish with online payments. Are you wanting to start and manage an online eCommerce site? Are you wanting to collection payments, or simply offer a service for payment type of website? and so on and so on. Once you determine what the functinoality will look like you can move on to determining how the transaction will take place and by whom.
2. When it comes to your visitor making a payment, the biggest determining factor for online payments is, do you want the final transaction to take place on your website start to finish, or will the payment be redirected to a third party website (such as paypal or google payments) and complete the transaction on their site and return to your site once completed? Simply put – will the transaction take place on your site or on a 3rd party site?
TRANSACTION ON YOUR WEBSITE: The transaction takes place on your website start to finish and the user never leaves your website.
There are many benefits to having the transaction take place on your website. For starters, it appears much more professional and secure. If credabilty is a factor for anyone considering online payments or eCommerce than I highly recommend going this route. There is a little more setup and procedures to implement, but in the end it’s a better process, I think.
To begin you have to have 3 main components for an online transaction on your website.
- Payment Gateway: A SECURE PAYMENT TRANSACTION PROCESS THAT MAKE MAKES THE PAYMENT POSSIBLE AND SECURE. A payment gateway is an e-commerce application service provider service that authorizes payments for e-businesses, online retailers, bricks and clicks, or traditional brick and mortar. It is the equivalent of a physical point of sale terminal located in most retail outlets. Payment gateways protect credit card details by encrypting sensitive information, such as credit card numbers, to ensure that information is passed securely between the customer and the merchant and also between merchant and the payment processor. A payment gateway facilitates the transfer of information between a payment portal (such as a website, mobile phone or IVR service) and the Front End Processor or acquiring bank. When a customer orders a product from a payment gateway-enabled merchant, the payment gateway performs a variety of tasks to process the transaction.
- Merchant Account: THE BANK WHERE FUNDS ARE ACTUALLY DEPOSITED INTO ONCE A TRANSACTION IS COMPLETED AND PASSED THRU THE SECURE GATEWAY. Merchant accounts are setup and management by an acquiring bank that handles the transactions and settlements from payment cards.
- SSL Certificate: THE SSL CERTIFICATE IN A ONLINE TRANSACTION IS WHAT ENCRYPTS AND SECURES THE ENTIRE TRANSACTION. When an SSL Certificate is applied to a website and domain name it changes the url from http:// to https://. Often most internet browsers will also show a “lock” of some sort as an icon on the page somewhere. This is important because it informs the user trying to complete the transaction that everything is now secure. If you do NOT see the “S” in the url DO NOT complete the transaction.
More professional experience for the user visiting your website. Sometimes it can be startling to a user when they are redirected into another website and asked to make a payment. Cleaner interface for the user and system overall. More flexibility in managing the transactions for things like reimbursements, canceling funds, etc.
More setup required with the merchant account, secure gateway and ssl certificate. More fees from these items as well. Generally a annual fee and a percentage of each transaction. however, I the percentages are generally less than that of a third party integration. It also can take some time to get all of your accounts setup and approved.
THIRD PARTY SITE: Transaction starts on your website and then completed on a third party website such as paypal.
When using a third party site and service the website owner is required to setup an account at whichever company they choose to work with. The more common companies include PayPal, Google Payments, and so on. Once setup they can then use their unique urls and in most instances can create unique urls for each product or service and then link to them from the website once the user is ready to “check out” online. The transaction looks something like this:
- User is on your site and finds what they want to pay for or purchase.
- Click on the pay now button, check out, or finish and is redirected from your website to the third party website where they see their total amount due.
- The complete the transaction on the third party website and once completed they are redirected back to your site. Often time it is common to setup a confirmation page that confirms their transaction is complete and done.
There are many benefits to this setup, but probably the most beneficial feature is the how easy they are to setup and deploy. You can have a link to collect payments in a matter of minutes.
The only requirement is that you setup an account with whichever 3rd party vendor you choose to work with. You will want to pay special attention to their rules and regulations for charges and their fee schedule for each transaction. Many of them vary and it’s important you know what you are getting into before completion.
Doesn’t require a merchant, ssl cert, or secure gateway (they provide all of this). However sometimes it’s good to have a ssl cert on teh site no matter what to always protect the users information that they are entering. Not always necessary though. Less programming is required for this option as well. Last but not least is that it is less expensive initially to use this option.
Not as professional of an appearance and user experience when using a third party. Sometimes there is also a lack of trust by the end user when using the third party company. Requires a percentage cost to the third party on every transaction when the processing takes place.
Overall, the above should help you to determine what route you want to go for your next online eCommerce project. Keep in mind that this is a brief overview and as with most things, there are certainly more things to take into consideration when making a final decision. For example, what type of platform you are using to offer your payment solution, and if it is a canned shopping cart or just a service for hire and payment setup. One Resolution has assisted with many Colorado Website Design and Colorado Web Development projects that include eCommerce and payment solutions. If you would like to learn more about our services you can visit our website at www.one-resolution.com or email us at firstname.lastname@example.org.