Introduction To Ecommerce

Many people new to websites and/or ecommerce are confused at the in and outs of ecommerce. Even many people who are fairly adept at scripting can set up a store using some popular package such as OSCommerce and then are left stumped by the idea of making it work with a payment gateway to actually collect money and put it into their account. In this article, I will give a brief overview of how the system is set up to collect your money. I will then discuss briefly what to look for in evaluating payment gateways. As usual, I will keep this basic and understandable just as I do with all of my articles.

The Basics - How Funds are Collected

Ecommerce simply refers to the practice of shopping online. From the site owner's perspective, it entails collecting funds from sales transactions on their website and depositing that money into the bank. In order to collect funds, you need to have a merchant account and a payment gateway (discussed below). Basically, when a person enters their credit card number on a website, the card number and buyer information is sent to a payment gateway. This is done securely. The payment gateway will interface with a payment processor to check availability of funds as well as any other criteria set for accepting transactions. If the funds are available, the payment processor will then deduct the funds. The payment gateway will then report back a successful transaction to the merchant, at which point the merchant's shopping cart system will respond by displaying a "Thank You" type message to the buyer. Funds will sit until the transaction is settled, which means the funds are collected and deposited to your bank account. Until a transaction is settled, the transaction will not post to your bank account and the corresponding debit will not post to the buyer's credit card account.

Merchant Accounts

A Merchant Account is a special type of account specifically for online retailers. They are designed to allow non-POS (point of sale) transactions using credit cards, or transactions where you don't have the person's credit card in hand. In other words, you don't have a card swiper. A merchant account is not the same as a bank account. It acts as a go-between between your payment gateway and your bank account, accepting funds from credit cards which are then deposited into your bank.

A merchant account is a relationship based on trust between you and the issuing bank. The bank takes funds from the buyer's account and deposits into your account. A payment processor takes care of checking for availability of funds and debiting from the credit card account. The bank issuing the merchant account is trusting that you will fulfill your end of the transaction by providing the product or service that the buyer purchased. In case where this does not occur, the buyer can dispute the transaction. This puts the issuing bank on the line because they are then obligated to return the funds to the buyer's card (a chargeback). Therefore, merchant providers are taking a risk in allowing a merchant to take credit cards under their name.

The organization providing your merchant account will do underwriting on the account when you apply to check your credit. If you have a history of too many chargebacks, you may be denied. In fact, too many chargebacks can result in you, as a merchant, being put on the Terminated Merchant File (also called The Match File). This is a blacklist which will effectively prevent you from ever receiving a merchant account again.

Payment Gateways

A payment gateway serves as the front end to your merchant account, allowing you to manage funds, transactions, and the like. It also serves as a connection between your website and your merchant account. It takes data submitted via your secure order forms and presents it to your processing bank. The processing bank then approves or declines the transaction and sends its response back to the payment gateway. The payment gateway then turns around and provides this data back to the merchant for appropriate handling of the transaction. A payment gateway, then, does not offer services such as merchant accounts or shopping carts, although some of the larger-known gateways do provide such options as value-added services.

Some of the better known payment gateway services are Authorize.Net, Verisign, 2CheckOut.com, Linkpoint, Paysystems.com, Worldpay.com, and MerchantCommerce. Some of the things to look for in a payment gateway are compliance with CISP, SDP and DISC (security initiatives put out by the major credit card companies), virtual terminal (to be able to accept transactions over the phone by typing in their data rather than only relying on your website), fraud prevention, recurring billing, methods of integration, cost and whether they can accept e-checks or not.

Fraud prevention is a big one because, as stated above, too many fraudulent transactions will result in chargebacks which could end up putting you on the Match List and your merchant account closed. Some of the common fraud detection mechanisms are Address Verification (AVS) which compares the customer's address with that on file with the issuing bank, CVV2 which makes use of the 3-digit security code on the credit card (4-digit on American Express cards).

Most gateways will provide instructions on how to interface with their servers from your web store. Most gateways offer two methods of integration.

One method is to have your site POST a form to the gateway's server which is pre-populated with your customer's information. At that point, the customer will provide the customer with the payment form which allows them to type in their credit card number in a secure environment. After processing occurs, the customer is then routed back to your website along with the results of the transaction. Your site again takes over the process. This method is usually easier to set up for site owners and it also means the site owner does not need to purchase their own SSL certificate (allowing secure transactions on the site itself). The tradeoff is that you do need to send your customers off of your website for payment collection. Many gateways offer ways to make the payment form look like your website using customized headers and footers, but the fact remains that the visitors are leaving your website.

The second method is totally invisible to the customer. If the site owner has an SSL certificate, they can set up security on their own site. This means they can host the payment form themselves, totally customizing it to their website. When the customer submits payment, your site will securely and invisibly submit the information to the payment gateway. The payment gateway will do the usual processing and then invisibly send the response back to the merchant's website, allowing it to respond properly. From the customer's perspective, they never left your website. And they never did. This type of setup requires an SSL certificate as well as access to the CURL library.

Many gateway providers can get you set up with a merchant account at the same time as the gateway. So, in most cases, you do not need to sign up for them separately.

Conclusion

Hopefully this has given you a brief introduction to how credit card payments are processed on the internet.


 

The top 10 Web Hosting Sites for Small Business

Provided below are the top 10 web hosting companies that will enable you host your business website such as your eCommerce websites, PHP websites, WordPress sites and even your personal websites such as your blogs.

1. Justhost
Professional Hosting from Just Host
2. ipage

3. Webhostingpad

4. NameCheap
Domains Starting at $0.48/yr with Namecheap
5. Bluehost
Bluehost Web Hosting $3.95
6. iPower

7. Hostgator

8. Godaddy
Lightning fast load times at a striking price! 50% off GoDaddy Hosting plans!
9. Hostpapa
100% Green Energy Hosting from HostPapa.com
10. Fatcow

Articles - News

Free Web Hosting Articles

listed below are the most important articles relevant to web hosting. The articles listed below will teach you on how to choose and register a domain name, how to host your website online. You'll also learn the methods you can use to enable your website rank well in the search engines and how to drive targeted traffic to your website. These articles will also teach you how to set up an eCommerce website and lots more.

4 Tips to Find the Web Host That's Right for You
5 Common Web Hosting Mistakes
7 Simple Steps For Choosing A Great Web Host
A Beginner's Guide To Web Hosting
A Good Way To Promote Your Site
A Guide For Choosing The Best Web Site Hosting
Service

A Guide To Virtual Web Hosting
A Guide To Web Hosting For The Beginner
Accepting payment at your ecommerce website
Advantages of a Dedicated Server
Affordable Php Mysql Hosting Is Within Your Reach
Are Free Web Site Hosting Accounts Really Free?
Article Marketing And Search Engine Optimization (SEO)
ASP Hosting Simplified
Basic SEO Services To Improve Traffic To Your Site
Before Choosing a Web Hosting Provider
Benefit of Expired Domains
The Benefit Of Using Tracking Tools
Benefits Of Using Web Hosting Services
The Best Website Traffic Is Free Website Traffic
Build Website Traffic For Free

Building Your Search Engine Rankings With Articles
Changing Domain Name – The Best Way!
Changing Web Hosts Made Easy
Cheap Web Hosting Companies and the affiliate system
Cheap Web Hosting With Godaddy
Cheap Web Hosting - Choose The Right Company
Choosing A Domain Name
Choosing A Reliable Web Hosting Service
Choosing A Web Hosting Provider By Their Customer Service
Choosing A Web Site Hosting Company – The Most Important Factor
Choosing The Right Domain Name For Your Business
Cpanel Is The Right Choice For Web Hosting Services
Using cPanel to Manage Your Host Files
How to Create a Money Magnet E-commerce Web Site
Creating A Web Site That Sells - How To Keep And Convert Visitors
Dedicated Or Shared Web Hosting? What Does Your Business Need
Dedicated VS Shared Website Hosting
Designing Your Ecommerce Website
Domain Forwarding Versus Domain Masking
What is Domain Name Backordering? Watch Out For This One!
Domain Name Email Forwarding Secrets
Domain Name IP Address And What Are They For?
Domain Name Registration - Choosing Your Business Name
Domain Names: Thinking Ahead
Domain Parking.. Does It Work?.. My Tests And Results
Domains & Their Extensions
Drive Traffic To Your Website Using The Right Keywords
Driving Traffic To Your Website Using Testimonials
Even a Cheap Hosting Company Can Help You Build a Website

Expired Domain Name Traffic
Factors by choosing the right web hosting company
Finding A Shared Host
Finding A Web Host To Fit Your Needs
Finding An Affordable Web Site Hosting Plan
Finding The Best Web Hosting Company
Do Free Classified Ad Sites Really Bring You Customers?
Free Domain Name - Convert A Long URL To A Short One
Free or Paid Web Hosting?
Free Traffic Generating Techniques To Drive Tons Of Visitors To Your Website
Free Website Hosting Vs. Paid Website Hosting Basics
How to Choose a Web Host - Frequently Asked Questions
Learn To Generate Leads For Free
Get A Web Hosting Merchant Account
Get the Best Web Hosting - Dealing with Web Hosting Review Sites and more.
10 Ways To Indirectly Get To The Top Of Search Engines
Get Traffic Hits Free
Get Yourself Reliable Web Hosting Service
7 Tips For Getting Listed In Search Engines
A Guide To Receiving Online Payments
The Beginner's Guide To SEO
Hosting Service Providers and Identity Theft
Hosting Your Own Web Server: Things to Consider
Learn How To Accept Payment Online From Your Customers
How To Choose A Domain Name For Your Business
How To Choose A Good Web Host (When They All Look Alike)
Ecommerce Hosting - How To Choose A Merchant Account
How To Choose A Quality Web Host
How To Choose A Reliable Web Hosting Company : A Tip For Newbies
How To Choose A Reliable Web Hosting Provider
How To Choose A Right Web Hosting Service?
How To Choose A Shopping Cart Vendor For Your E-Commerce Site
How to Choose a Web Host: Factors to Consider
Back Links – How To Get Them, How To Use Them
How To Pick A Domain
Importance Of Search Engine Optimization For Online Businesses
Introduction To Ecommerce
An Introduction To Search Engine Optimization And Web Design
IP Address And Domain Name – What's The Connection?
Are Links Important For Search Engine Rankings
Do You Need A Lot Of Bandwidth?
Do I Need Managed Web Hosting Or Shared Web Hosting?
Using MySQL in a Hosting Environment
Domain Name: How Not To Loose One Before Buying It
5 Things To Look For In A Promising Web Host
17 Ways To Promote Your Online Business And Explode Your Sales!
How To Promote Your Web Site
7 Proven Ways To Increase Your Targeted Website Traffic
What's The Right E-Commerce Package For Your Business?
Improved Search Engine Ranking For The Website
Learn The Secret Of Over 100 Signups In Just 8 Weeks!
PayPal - A Safe, Secure Option for Small and Medium Businessmen
Make Profit from Buying and Selling Domain Names
Benefits Of A SEO Sitemap Generator
Internet Traffic And SEO Techniques
What Makes A Successful E-Commerce Website
3 Differences between Shared and Dedicated Hosting
Pros and cons of shared web hosting
Using A Site Map Builder When Adding Google Sitemaps To Websites
Starting A Small Ecommerce Business
Starting Your Own Web Hosting Business From Home And Make It Profitable Like Hell
What is Web Hosting?
Web Hosting Common Mistakes
8 Ways To Promote Your Business Or Website
7 Ways To Harvest Free Traffic
10 Ways To Convert Visitors To Leads
Targeted Website Traffic For Newbies
4 Ways To Build Links To Your Site
Unlimited Web Hosting Offers Explained
Understanding SEO
10 Tips To Keep Visitors On Your Site Longer And Increase Conversions
Tips On Domain Name Registration
Tips For Choosing A Web Hosting Company
Tips For A Successful Web Hosting Business
Cheap Web Hosting - The Things You Never Knew
Domain Names: The Remembrance Factor

WebToolHub.com - 100% Free Online Tools


Free Web Hosting