[David Strom's Web Informant] 22 February 2010: Taking credit card payments via the Internet

[David Strom]

Web Informant, 22 February 2010: Taking credit card payments via the Internet

It all started when one of my clients wanted to pay me with a credit
card. It is odd that I have been in business for 18 years and this is
the first time that I have been paid in this way. It is doubly ironic
in that I used to teach classes on eCommerce back in the early days of
the Web and hadn't ever gotten around to getting a merchant account,
which is what you need to take credit card payments.

If you want to accept credit cards, you enter a brave new world where
there is an entire collection of jargon to use your secret decoder
ring. For example, "discount rate" is the fee that the card issuer
(like American Express or Visa) charges you per transaction. Typically
these are anywhere from one to four percent, depending on a series of
circumstances. Then there is the "virtual terminal" which is a series
of Web-based services that allow you to enter the credit card number
in your browser and have the transaction completed online. These
replace the typical credit card swipe machines that you see in every
retail shop.

Since my client wanted to use their American Express card, my first
stop was to try my business bank, Bank of America, and see what they
could offer me. Online had limited information but I tried the 800
number and got nowhere fast. They suggested that I talk to Amex and
see what they could do for me. Within about 30 minutes I was setup
with an Amex merchant ID and could start accepting their card via a
telephone response number. The issue was that the transactions would
take some time to clear and actually end up in my bank. They could
also sell me their virtual terminal software, called Payment Express,
which would be an extra charge of $20 a month.  Amex has many
different options that can easily get confusing – my recommendation is
if you want to go this way, first sign up online to access your
account and then read the various screens that describe Payflow,
Payment Express and their physical card payment terminals.

In the interests of research, I pressed on to see what else is available.

Paypal was my next stop. While you can process some credit card
payments, once you get beyond a few hundred dollars you need to have a
Paypal business account. This means $30 a month, plus transaction fees
of 2.4 to 3.1% to use their virtual terminal software. Here is a
description of that process:
https://www.paypal.com/us/cgi-bin/webscr?cmd=_vt_hub-inside

Intuit was next. Their merchant services are $13 a month, and it took
about a day to set me up. They also have their own virtual terminal
software and their home page takes something to get used to. They also
charge less per transaction, with fees ranging from 1.9 to 2.9%. They
have a great series of online demos here on their Web site:
http://payments.intuit.com/products/quickbooks-payment-solutions/online-credit-card-processing.jsp

So which do I recommend? If I had to start over knowing what I know
now, I would go first to Inuit. They are geared towards their online
product, they have a simple sign up process, and if you already use
Quickbooks they can integrate with that too if you end up with lots of
transactions. (I have been a happy Quickbooks user for nearly two
decades, starting with the DOS version, can you believe it?) I would
steer clear of Paypal, I just think they charge too much for too
little.

There are dozens of other payment processors online, and this isn't
meant to be a comprehensive review. And feel free to share your own
experiences on my blog or via Twitter.

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