Online Credit Card Payment Systems for Retail and B2B

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Not being able to accept online credit card payments can really hamper your business revenue. Moreover, in addition to setting up methods for credit card payments, many retailers and even B2B actors also consider additional forms of payments, via phone calls, online checks, messages and emails. The main incentive for buyers and even occasional visitors is the possibility of paying for the products and services as fast and easy as possible. The online credit card payment system facilitates all sorts of purchases for buyers, but it is also an important source of revenue for businesses.

Offering the possibility of online credit card payments is required for any business with online presence. The complex process of online credit card payments involves three factors: secure shopping cart software, your own merchant account to process payments or the services of third party credit card processors. Setting up your own merchant account can be a long, tiresome process, which demands high start-up costs.

Own merchant accounts usually cannot be handled by small businesses, which prefer to direct their investments elsewhere and leave third party processors handle the transactions details. On the other hand, WPS (or Web Payment Services) providers ease the process of setting up a merchant account and reduce the length of the process to only a few minutes. The largest WPS is PayPal, with 11 million users, followed by MoneyBookers, Western Union and others.

Using WPS eliminates the need of shopping carts or transaction processing software, which reduces the initial costs of doing business. As your business expands, you might find it disadvantageous to use third party processors, as they charge a small fee for each of your transactions. When it comes to companies with a high transaction volume, these fees add up and might reach an impressive sum that the company can save just by using their own merchant account.

E-commerce solutions are a useful way to accept online credit card processing and they don’t require any type of interaction between the client and the service or products provider. This solution is also known as EDI or Electronic Data Interchange and offers a broad range of online credit card payment versions, from mobile payments, e-checks, electronic wallets to e-cash. These are the options you can choose from as long as you have your own merchant account. If you prefer, you can have a third party (PSP or Payment Service Provider) handle all the transaction on behalf of your business. EDI is only used in B2B (business-to-business) relationships, and individual customers won’t use it directly.

Pros and cons of electronic data interchange transmissions (EDI) in B2B transactions

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EDI is one simple way of saving money for online businesses, as it substitutes for the high flow of information and direct communication between business representatives and their clients. In addition, all materials such as documents, faxes, phone calls and meetings can be eliminated, thus saving time for both parties. Online data storing can save money previously directed to organizing the business, for processes like managing the paper flow – organizing, distributing, sorting and searching – and for manual entry. Online credit card processing through EDI minimizes the risk of errors and the speed at which the information is transmitted.

However, implementing online credit card payments through EDI is not always a smooth process, as not all paper templates and systems of organizing data can be used in EDI, thus they need to undergo a process of change that allows them to be processed by software. In addition, the initial setting up of EDI systems is costly for companies, as large funds must be invested in personnel training, implementation of EDI and customization. Smaller companies, in particular, will find it expensive to invest in EDI and not all trading partners are willing to use these systems, making it difficult to do business.

Fraud protection for online credit card payments

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Online credit card management is easy when you have access to e-banking and online shopping. Even so, you need to be aware of the minimum security measures you can take in order to protect your personal information. Your credit card account details should never be shared with anyone; if such a thing happens and you notice fraudulent payments from your account, notify the bank immediately so that they can either secure your details or freeze your account temporarily. Both individuals and business clients of online credit card services have faced this situation many times now.

All businesses that handle online credit card processing have to comply with the newly released Payment Card Industry Data Security Standard or PCI DSS. This category includes all service providers and online merchants, regardless of their domain of activity. PCI DSS is a set of standardized rules meant to protect any stored credit card data and the company’s compliance with these rules is annually verified by the PCI QSA (Quality Security Assessor) for large business or SAQ (Self-Assessment Questionnaires) for small companies.

Companies that don’t use SSL or S-HTTP protocol to encrypt data online, the privacy of online credit card information is seriously compromised. These companies try alternative solutions, such as taking the transactions off-line, through customer support personnel, to whom you call in your credit card information in order to make the purchase. This method is inconvenient as it is slower than automated purchases processing.

Most companies, however, maintain a secured server that uses the aforementioned protocols for data encryption, which partially eliminates the risk of online credit card fraud. Unfortunately, these measures are still not enough and cannot ease people’s fears completely. For increased data protection, three methods have been developed, which ensure the highest security level of transmitting online data. These methods are First Virtual Holdings, CyberCash and SET (Secured Electronic Transactions), the latter being proposed by Visa, in conjunction with MasterCard.