Frequently online businesses want to be able to collect payments over the Internet. This is usually accomplished through some sort of Payment Gateway, which is is an e-commerce service that authorizes payments for e-businesses and online retailers.

• It is the equivalent of a physical POS (Point-of-sale) terminal located in most retail outlets.
• Payment gateways encrypt sensitive information, such as credit card numbers, to ensure that information passes securely between the customer and the merchant.

Payment gateways encrypt information handled through SSL. This reduces the opportunity for fraud, and adds security to the transaction process. Gateways communicate with a variety of entities, including:

• The customer
• The merchant (through their website)
• Credit Card companies (by verifying information)
• Internet Merchant accounts that relay order information from the gateway to the merchant's bank account.

There are hundreds of online payment gateway providers that allow you to process commercial transactions over the Web without compromising credit card numbers or other confidential information, they can be grouped into two different groups:

• Merchant Payment Services
• Personal Payment Services

The advantage of using most payment gateways is that you are not responsible for storing your customer's credit card numbers.

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Merchant Payment Services

Merchant Payment Gateways use specialized software on the merchant's server to provide for secure payments across the Internet. 
There are numerous Merchant Payment Gateway providers:

• VeriSign Payment Services
• Authorize.net

For you to use most payments via many merchant payment services you must: 

1. Get an Internet approved merchant account from an affiliated merchant bank.
   
   • An Internet merchant account is configured to allow you to accept "card not present" transactions which are specifically designated as originating through the Internet.
2. Select (or create) code that will be installed on your server that allows you to take payments on your website.
   
   • Buy Now Buttons that send payments directly to the Merchant Payment Service
   • Select a pre built shopping cart that automatically connects your Web site to the payment gateway and to a database on your server, allowing you to accept payments immediately and write orders and other customer information to your database.
3. Register with with the merchant payment gateway provider: The online registration guides you through the process of setting up your web page to process payments. 

How the Merchant Payment Gateway works:

• Step 1: The merchant submits a credit card transaction to the Merchant Payment Gateway on behalf of a customer via secure Web site connection, retail store, MOTO center or wireless device (using the buy now buttons or shopping cart provided by the merchant payment service provider).
• Step 2: The Merchant Payment Gateway receives the secure transaction information and passes it via a secure connection to the Merchant Bank's Processor.
• Step 3: The Merchant Bank's Processor submits the transaction to the Credit Card Network (a system of financial entities that communicate to manage the processing, clearing, and settlement of credit card transactions).
• Step 4: The Credit Card Network routes the transaction to the Customer's Credit Card Issuing Bank.
• Step 5: The Customer's Credit Card Issuing Bank approves or declines the transaction based on the customer's available funds and passes the transaction results back to the Credit Card Network.
• Step 6: The Credit Card Network relays the transaction results to the Merchant Bank's Processor.
• Step 7: The Merchant Bank's Processor relays the transaction results to the Merchant Payment Gateway.
• Step 8: The Merchant Payment Gateway stores the transaction results and sends them to the customer and/or the merchant. This step completes the authorization process – all in about three seconds or less!
• Step 9: The Customer's Credit Card Issuing Bank sends the appropriate funds for the transaction to the Credit Card Network, which passes the funds to the Merchant's Bank. The bank then deposits the funds into the merchant's bank account. This step is known as the settlement process and typically the transaction funds are deposited into your primary bank account within two to four business days.

Advantages:  merchant payment services is that it provides the merchant with a fully functional, externally managed payment processing system that allows: 

• Risk Management – Sensitive data is stored in the payment service data center, never on your computer.
• Accept a Variety of Payments – Most merchant services will allow you to accept all major credit cards, eCheck.Net (electronic checks from bank accounts), gift cards, and signature debit cards.
• Manage Your Transactions – Most merchant services provide a Merchant Interface which will allow you to to monitor and control payments through your Web site.
• Prevent Fraud – Many tools can help to identify suspicious transactions using fraud tools.
• Receive Payments Quickly – Your funds are automatically deposited into your merchant bank account within days.
• Free Help – Most services provide live technical and account support to merchants, as well as access to online documentation and user guides
• While you have access to all transaction-critical information, VeriSign protects credit card data with the highest level of security, so you never have to worry about compromising your customer's sensitive credit card data.

Disadvantages: Setting up a merchant account generally requires you to pay set-up fees, monthly fees and per transaction fees which may not be cost effective for new ventures with small volumes or for small purchases, such as "pay per play" on-line video games:

• Setup Fee: $99.00
• Monthly Gateway Fee: $20.00
• Per-Transaction Fee: $0.10

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Personal Payment Services

PayPal, Amazon Payments & Google Payments enables any individual or business with an email address to securely, easily and quickly send and receive payments online.
Personal payment services cater to small businesses that do not want to set-up their own online payment mechanisms.
Personal payment services cater has a number of options that allows users to quickly set-up online payment mechanisms on their Web sites:

• Request Money  just enter the recipient's email address and the amount you are requesting. The recipient gets an email and instructions on how to pay you using PayPal at www.paypal.com.
• Buy Now Buttons Buy Now Buttons or Pay now buttons are a low-cost way for you to accept credit card and bank account payments, and can be fully integrated with your website in a few easy steps.
• Subscriptions allows you to set-up subscriptions for recurring payments from customers.

On PayPal:

• When a buyer clicks the Buy Now button, he will be taken to a secure PayPal payment page, where he can log in to an existing PayPal account or sign up for a new one, and quickly complete the purchase.

<form name="_xclick" action="https://www.paypal.com/cgi-bin/webscr" method="post"> <input type="hidden" name="cmd" value="_xclick"> <input type="hidden" name="business" value="auctionstu01@carbon.cudenver.edu"> <input type="hidden" name="currency_code" value="USD"> <input type="hidden" name="item_name" value="Lecture Notes"> <input type="hidden" name="amount" value="0.31"> <input type="hidden" name="shipping" value="0.01"> <input type="image" src="http://www.paypal.com/en_US/i/btn/x-click-but01.gif" border="0" name="submit" alt="Make payments with PayPal - it's fast, free and secure!" width="62" height="31"> </form>
If you dynamically generate portions of your site, you can populate your Buy Now buttons dynamically and save time by updating the variables with information from your database. To use the button above for a different item, you would only need to edit two variables: item_name, and amount.


PayPal Shopping Cart: When you use PayPal's free Shopping Cart on your website, your customers can purchase multiple items with a single payment, browse your entire selection, and view a consolidated list of all their items before purchasing. The PayPal Shopping Cart is a low-cost way for you to accept credit card and bank account payments, and can be fully integrated with your website in a few easy steps.

<form name="_xclick" action="https://www.paypal.com/cgi-bin/webscr" method="post"> <form name="_xclick0" target="paypal" action="https://www.paypal.com" method="post"> <input type="hidden" name="cmd" value="_cart"> <input type="hidden" name="business" value="auctionstu01@carbon.cudenver.edu"> <input type="hidden" name="item_name" value="Lecture Notes"> <input type="hidden" name="amount" value="0.31"> <input type="hidden" name="shipping" value="0.01"> <input type="image" src="http://www.paypal.com/en_US/i/btn/sc-but-01.gif" border="0" name="submit" alt="Make payments with PayPal - it's fast, free and secure!" width="70" height="35"> <input type="hidden" name="add" value="1"> </form>
When a buyer clicks the "Add to Cart" button, a new window will appear listing the contents of the buyer's PayPal Shopping Cart, including the item just added. To make the purchase, the buyer clicks "Checkout" from this window.

Personal payment services charge fees based on the type of account you set-up and how much you sell.  Currently the fees for PayPal, Amazon Payments and Google Checkout are the same and are paid per transaction:
 

	Premier/Business Account
Open an Account	Free
Send Money	Free
Withdraw Funds	Free for US bank accounts
Add Funds	Free
Receive Funds	2.2% + $0.30 USD to 2.9% + $0.30 USD
Multiple Currency Transactions	Exchange rate includes a 2.5% fee*

Advantages: The advantages of personal payment services is that they are lower cost for small payment volumes and they are very easy to set up.

Disadvantages: The customer completes the transaction on the payment service website - which can look less professional than having your own integrated payment mechanism.

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Whatever payment service you choose, it is your responsibility as an Internet merchant to use a reputable payment service that will handle credit card information with care, minimizing the likelihood that information for your customers will be lost, stolen or misused in any way.

Labels: payments, website tips

Personal payment services are an easy way for small businesses to take payments online.  Personal payment services like PayPal, Amazon Payments & Google Payments enables any individual or business with an email address to securely, easily and quickly send and receive payments online. They can provide a number of benefits to small online businesses, including:

• Personal payment services cater to small businesses that do not want to set-up their own online payment mechanisms.
• Personal payment services cater has a number of options that allows users to quickly set-up online payment mechanisms on their Web sites:
• Send Money allows you to pay anyone with an email address.
• Request Money just enter the recipient's email address and the amount you are requesting. The recipient gets an email and instructions on how to pay you using PayPal at www.paypal.com.
• Buy Now Buttons Buy Now Buttons or Pay now buttons are a low-cost way for you to accept credit card and bank account payments, and can be fully integrated with your website in a few easy steps.

While there are advantages to personal payment mechanisms, there are also disadvantages. These include:

• Personal payment services usually only accept debit and credit cards
• Because PayPal, Amazon Payments and Google Checkout true payment gateway, there are some extra steps you need to go through in order to deposit money from your personal payment account into your bank account.
• Perhaps the biggest disadvantage is that using a personal payment service establishes you as a small vendor which could negatively impact your credibility online. 

For many small businesses that can’t really justify the expense of a more traditional payment gateway, however, PayPal, Amazon Payments or Google Checkout can be essential to setting-up your online business. When making a payment service decision,  it is a good idea to review your business needs. Different payment options can be compared based on simplicity for you (the entrepreneur), ease of use for the customer, cost as well as any potential impact on your credibility.  Compare a number of different options, and understand what would work best for your particular situation. Remember, no decision is forever, if you need to, you can add a true payment gateway at a later date as your online sales grow.

Labels: payments, website tips

I had not planned to write my first post (for a long time) on Amazon Payments but sheer frustration with this new service has driven me to write on this topic. Amazon Payments is a new service introduced by Amazon to compete with PayPal and the new Google payments service. These types of personal payment services are great for entrepreneurs because they allow small businesses to take payments over the internet without having to manage the payment process themselves.

My company switched to Amazon Payments a month ago (from PayPal) because they were offering a few months of service without fees and because they allowed us a few programming options that PayPal did not. Specifically they allowed us to redirect subscribers to our site where they could complete an application form to set-up their account with us all in one step (PayPal required us to send a confirmation email to take the subscribers to the correct account set-up page).

The Amazon Payments service worked very well for us when it came to setting up and taking our first few payments. However, when it came time for us to withdraw the money Amazon and put it in our bank account we ran into problems. A bug in their system would not allow us to withdraw funds even though we had received the funds 3 weeks ago and had waited their 14 day wait period for withdrawals. Given that we were beta testing the software, I am not complaining about finding a bug in the system. My complaint with Amazon Payments is that they were not equipped to respond to complaints that were about bugs.

Flaws with the Amazon Payments Customer Service Process:

1. They only allow email complaints using their form. They do not provide users with either a direct email address OR a phone number.
2. Their customer service reps DO NOT read either the email you send or your transaction history when responding to your complaint.
• In my case they kept responding to my email by telling me that I could not withdraw my entire balance. I could just withdraw the amount tha thad been in the account for over 14 days and never noticed that I was complaing that I could not withdraw the balance that had been in my account for 14 days AND I had multiple transactions in my transaction log that showed I could not withdraw the amount of money they said I should be able to withdraw!
3. When they have an error in their response you cannot reply to their email and tell them that they have made an mistake. You must go through another online form (which they do not read when you send it to them).
   
4. There is no phone number anywhere for Amazon Payments! I finally called the Amazon Corporate office and could not get the number or name of anyone in the Amazon Payments department. All the customer service reps in the corporate office could do was send an email to the amazon payments office to get them to address the bug in their system.

When someone has your money and there is a bug in their system that keeps you from getting it a company needs to have some recourse to allow customers to report problems and talk to someone that can actually help them. In my case not only did one customer service rep ignore my transaction history and tell me I just needed to log in and withdraw my disbursable balance. When I replied that that rep had not solved my problem A second rep ignored my history AGAIN and gave me the same response.

The only way I was able to get any response from them was to Tweet them on Twitter - and then I finally got someone to look at my account.

That is not the way for any company to do business!

Labels: amazon payments, customer service, payments, twitter