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

PayPal has…

1. Associated merchant PayPal account and identified bank account (for you to transfer funds to/from your merchant PayPal account)
2. No one-time setup charge
3. No monthly fees
4. Transaction cost of 2.9% of the total of each transaction
5. Transaction fee of $0.30 for each transaction

All the rest probably have…

1. Associated merchant bank account
2. One-time setup charge
3. Monthly fees (even if not used that month)
4. Much lower transaction cost then PayPal
5. 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… thom@tlanet.net

NOTE: Thomas A. Little passed away on June 5, 2019 at his home and office in Keene, NH. Thom will be missed by Charles and the CharlesWorks staff and those who knew him.