Banking For Online Stores

Online stores must have a method of easily conducting money from the customer to the store owner. Most customers will pay via a credit card. You will lose most of your sales if you expect customers to place the order, then mail you a check or money order. In addition, neither of these options are secure and you risk losing money from forged or bad documents.

Obviously, to accept credit cards a store owner must have a method of trading the numbers for cash as well as confirming the credit card is not a bad card. There are three basic routes to go.

  1. Some store owners accept credit cards online and run them through their credit card machine already in place at their business. As a minimum the store owner will be required to have an SSL Certificate (a secure site) which is an additional cost to hosting.  Before accepting cards in this manner, the store owner should check with their credit card transaction company to insure this does not violate their Terms of Service (TOS) agreement as this is a much less secure method of credit card acceptance. The owner should also check fee rates for accepting cards online. Some companies charge additional monthly fees, exorbitant transaction fees or percentage rates and may have other requirements your website must meet before they will allow an owner to accept the credit cards online and run them through their in-store machine.

  2. Although the most common financial transaction company is PayPal, there are some drawbacks to their service. Many people still believe they must have a PayPal account to purchase with this method. If your product is high dollar, this may not be the route to go as PayPal does have a $2,000 limit in most cases for people who do not have a confirmed account with them. When a purchase is made via PayPal, PayPal places the money into a holding account. The store owner must then transfer the funds from that account into their company's checking account. Since this process may take up to five business days it may be difficult to quickly turn your sales into usable cash. At the time of this writing, PayPal charges 2.9% and thirty cents per transaction. One benefit of PayPal is the ease of set-up for a store. PayPal does not have a credit application and can usually be set up within minutes. PayPal also does not charge a monthly fee unless the business owner sets up a business account. Most sole proprietorships can use the Premier account which does not charge monthly fees.

  3. Independent card transaction companies are a third alternative. There are several companies who charge comparable rates to PayPal, but do not set transaction limits and place the funds directly into the company's account. Some transaction companies may place a short hold (24 to 48 hours) on large transactions. Every transaction company has different rules, credit criteria and transaction rates. Typically it takes up to two weeks for an independent company to accept the application and have the transaction gateway in place for adding onto the web store. Most independent companies also charge a monthly fee. A store owner will still be required to have a secure certificate on their website as personal data is entered on the company's site, however the monetary transaction is handled through a gateway provided by the credit card company. A store owner should expect a monthly fee ranging from $10 to $50 per month, charge rates beginning around 2% and transaction rates beginning at twenty cents.

Although Wiregrass Advertising does not "recommend" any transaction companies, we have worked with PayPal PayPaland 1st Pay Gateway in the past and have found them to be reputable companies. Both charge similar percentage rates and transaction fees. 1st Pay Gateway charges a $10 to $15 monthly statement fee in addition to set-up fees and additional monthly fees for total monthly charges of about $25. You may click on their links for additional information.

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