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Processing Online Credit Card Transactions
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After you decide on a gateway, you’ll need a merchant account, or someone who can actually process the credit card transactions. If it’s starting to sound tricky, don’t worry because obtaining a merchant account is easy. Authorize.net has a list of approved resellers for you to choose from. We went with United Bank Card because they had a respectable-looking web site, a solid reputation, friendly customer service reps, and competitive pricing. The application process consisted of filling out and faxing some basic business information and waiting a couple days for approval. Once approved, they provide us with an Authorize.net login and transaction code to get our store up and running.
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Some vendors such as PayPal are all-in-one solutions and provide a merchant account along with a payment gateway. This might seem more attractive and less of a hassle, but tends to come at a cost. With Paypal, you’re charged between 2.2% to 2.9% plus .30c per transaction. With the merchant account/Authorize.net combo, you should be able to negotiate somewhere around 2% plus 20c per transaction. All of the merchant account providers are selling the same product, so don’t be afraid to haggle a little. In the long run, every cent counts.
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Put your Money where your Mouse Is: 6 Payment Gateways Reviewed [eCommerce]
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What is a Gateway?
In short, a gateway connects your ecommerce Website to your merchant account.
The gateway facilitates online payments by connecting your secure order form with your specific merchant account at a processing bank. The gateway takes the submitted form data and presents it to the processing bank. When it receives a response from the bank, it presents that return data to the site of origin for appropriate handling.
The gateway itself doesn’t provide ecommerce features such as shopping carts, Web hosting, or merchant accounts, although, as you’ll see, many larger gateway providers do offer additional services like these.
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The Pragmatic Bookshelf | Payment Processing with Paypal and Ruby
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Ask 37signals: How do you process credit cards? – (37signals)
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We’ve also recently started a major conversion of our internal systems to a centralized billing system. In the past each product had its own internal billing engine. Today we’re centralizing this. We’re essentially building an internal web service that our other products can talk to when they need to charge a card. They ping the service with the details and the central system takes care of the rest. This is much cleaner and much easier to maintain since we only have to deal with processing in one place. Other benefits will come from this centralization down the road.
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Next we have an account with Authorize.net. Authorize.net is the gateway that our systems talk to. They take the credit card charge information from us, process the charge, and then deposit the money into our merchant account. If the charge doesn’t go through they send us a denial code which we then wordsmith and present to our customer.
The engine to process the recurring monthly charges is something we built custom. If you use Rails, Active Merchant would give you a good place to start. We don’t use Active Merchant because we built our stuff before AM was released, but it’s definitely a nice library.
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Today’s moving parts
Ok, so how do we do all this? First off, we have a merchant account. A merchant account is needed to accept credit cards. Every business that accepts credit cards needs to have a merchant account. We’ve used a few companies in the past, but currently we’re using an account provided by Chase bank. You should basically look for a reputable company you can trust that has good rates. The rates may not make all that much difference early on, but once your daily volume picks up a few basis points can make a big difference on your bottom line. But at first I’d pick trust over rates. You can always negotiate for better rates down the road.
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