E-Commerce on Your Website
by Thom Little of Thom Little Associates, Ltd.
E-Commerce is selling a product or service on the Internet. It usually requires
credit card processing that is provided by a third-party website (called a
shopping cart) that can be accessed from your website.
The shopping cart accumulates the items for the buyer's order and then
calculates the total cost. After the customer approves the transaction and
provides credit card information, it charges their credit card, sends the
payment to the merchant (you) account, and sends an e-mail record of the
transaction to both the buyer and merchant.
You need to choose the shopping cart and credit card processing service that you
will access from your website and establish a business agreement with them. You
also need to arrange with someone to develop the appropriate additions to your
website to tailor the shopping cart to your specific needs. These modifications
can range from a few simple buttons on a single page to a multipage catalog with
hundreds of items.
There is a range of solutions for credit card processing on your website in two
basic categories … PayPal and all the others
Associated merchant PayPal account and identified bank
account (for you to transfer funds to/from your merchant PayPal account)
No one-time setup charge
No monthly fees
Transaction cost of 2.9% of the total of each transaction
Transaction fee of $0.30 for each transaction
All the rest probably have…
Associated merchant bank account
One-time setup charge
Monthly fees (even if not used that month)
Much lower transaction cost then PayPal
Transaction fee for each transaction
With PayPal the incoming funds are immediately available for
outgoing PayPal transactions on the Internet but may take a few days to transfer
to your bank account. With all the rest the funds are probably immediately
available for either outgoing PayPal or outgoing checks from your bank account.
With PayPal the incoming funds have the transaction cost and
transaction fee removed and the balance is deposited to your PayPal account.
With all the rest the full transaction amount is probably deposited to your bank
account and a withdrawal is made once a month to the card processing service for
the calculated fees.
Based purely on the processing costs the cheapest solution
for your business is determined by the volume of credit card processing you
expect each year…
Less than $30,000/year - PayPal
More than $50,000/year - one of the others
Between $30,000/year and $50,000/year - depends on size
and number of transactions
Living in this part of the country you expect that the people you deal with are
honest and you can be relaxed about security. When working online you must
assume that someone is lurking to rip you off and you must constantly take
appropriate steps to protect yourself.
The best precaution is to have a person that you trust in the
purchasing/shipping cycle who verifies that the items being shipped were
purchased at the price you expected the customer to pay. If they are not then
that trusted person needs to stop the shipment and take corrective action.
For more information…