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— How Would You Like to Pay for That? — Options abound when it comes to payment. Credit cards? Debit cards? Purchase order? Customer accounts? But for the most part, e-commerce transactions are credit card-based. Behind the scenes, credit card transactions are pretty complex. They involve a number of independent groups, including you (the merchant), your bank, the customers, the customers' banks, the companies that issued the customers' credit cards, and the large credit and debit "acquiring banks" who manage the whole mess. All these various groups need to work together before your customers' money can make it into your account. To make sure everyone remains happy along the way, there are quite a few things to consider. The big issue is this: Don't charge the cards until the products are shipped or delivered to the customers. "Huh?" you say. "But I can charge the cards after they give me their numbers, right?" Wrong. Unless you've been in the mail-order business before, you're probably not familiar with this rule. Technically, you are not allowed to move money immediately into your account unless the product is delivered or shipped on the same day. In brick-and- mortar, real-world retail stores, delivery and payment happen simultaneously. Merchants charge customers' cards and then the customers walk out of the stores with bags full of goodies. But when you're selling products remotely, as you will across the Internet (unless you're delivering software or online content instantly), you can't debit the credit cards until you've completed the "pick, pack, and ship" fulfillment processes. So here's how most credit card transactions work over the Internet: Authentication. It's a good idea to make sure the cards you are accepting have valid numbers, have actually been issued, and are not reported stolen. 2. Authorization. This process checks whether funds are available for purchases. If they are, you can put reservations on those funds. But hold on — you don't get the money yet. 3. Settlement. Once you've shipped the products or delivered them to the customers, then you let the banks know. The banks will release the funds that were previously reserved, and the money will make its way through numerous banks and intermediaries into your account. That's how most Internet transactions are processed. But they can get a lot hairier. For instance, how will you process returns? How will you handle partial sales? How will you deal with back orders? How will you fulfill partial orders? Take these back-office issues into account when you select the solution to maintaining your payments. A number of applications are on the market today. Most have evolved over the last several years and been tested under a variety of conditions. Additional information can be found at the websites of these vendors: Another payment method that has become popular in the Ebay age is Paypal, which lets people draw money from their bank accounts or credit cards and send it via e-mail. PayPal is free for personal use, but businesses are charged to send and receive money. Neteller is a similar service. With all that money flying back and forth over the Internet, many customers and merchants worry that transactions may not be safe and that the proverbial hackers are stealing everyone's money. While many of the solutions listed above use the SET (secure electronic transaction) standard, which contains extra security measures and antifraud technologies, there's a great deal more you can do to make sure your transactions are secure. |
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