Introduction
You have something you want to sell on the Internet. Maybe it's a book, or a CD or
a piece of software you wrote. You are in luck. The time has never been better.
Internet shopping has become a mainstream activity. Increasing numbers of people
are willing to open the wallet to purchase items or services over the Net.
"But," you say, "How do I collect the money from the customer?"
Good question. There are several methods of collecting monies from online sales.
Many online merchants offer 2-3 choices of payment methods so customers will
have options.
1. First, you can ask online customers to send you a check. When the check
arrives and clears the bank, you deliver the product. If this is your only method of
transacting a sale, you will lose many, many customers. The Internet is based on
impulse buying. Very few people will go to effort of writing and mailing a check,
and then wait several weeks for delivery. Most merchants offer this option to
accommodate people who do not have credit cards.
2. Persons who are already accepting credit card transactions for products or
services they sell offline can ask web customers to phone or fax you with their
credit card information. Then, you can process the transaction manually. Please
avoid asking people to email you their credit card information. Almost everyone
knows that email is insecure and this request will damage your credibility in the
eyes of potential customers. If you opt for the phone method, be prepared to handle
calls 24/7. The Internet is a global community and people expect to shop at their
convenience.
You will attract more sales if you provide an 800 number. However, be aware that
800 numbers are not globally accessible. You risk losing international sales if this is
your only method of transacting payments.
Asking customers to phone in their credit information will generate more sales than
asking for checks. However, your sales will be increase considerably if you provide
a means for customers to make their payments online.
3. You can accept credit card transactions online over secure lines.
Internet merchants indicate that this method is the single most effective means of
conducting transactions. Without the ability to process credit cards, your online
sales will be a fraction of what they could be. More about this later.
4. You can use alternative methods of accepting online payment. There are
several alternative technologies available. Each comes with its own strengths and
weaknesses. Your choice will depend upon your individual situation. More later.

Accepting Credit Card Transactions
It's worth mentioning again. Your sales will increase dramatically
when you offer your customers the ability to pay by credit card
transaction. Those of you who already accept credit cards in your
offline businesses can skip this section.
Credit card transaction is a big topic. For simplicity's sake, let's break it down into
three categories: Merchant Accounts, Internet Merchant Accounts and Credit Card
Processing Services.
Merchant Accounts
A Merchant Account is a relationship between a business (i.e. a merchant) and a
merchant bank that allows the merchant to accept credit card payments from
customers.
Acquiring a Merchant Account can be difficult. Many banks or financial institutions
have stiff requirements and regulations regarding the issuing of a merchant
account. The situation will differ depending on your bank, your country's banking
regulations and your individual situation. Many a merchant has approached their
bank to discuss a merchant account only to discover that the friendly banker
becomes less friendly. These accounts are often beyond the means of people who
are operating small or new businesses.
When you apply for a merchant account at your bank, you will be required to
demonstrate that your business has had an extended period of
financial stability. Expect to present your business plan, your
financial statements and various other documents. Factors
considered include cash reserves, the length of time you have
been in business, your tax returns, your credit history, debt
load, refund policies, volume of business, cost of item being
sold and other sources of income. Those who pass the stringent
requirements might be asked to put up a substantial sum of money (several
thousand dollars) as a safeguard against chargebacks or credit card fraud. They
could also be asked to pay for the software or terminals that they will be using.

Those who are eligible for a Merchant Account will need the necessary hardware or
software. In some cases, depending on the bank and depending on the type of
business that you are operating, you will need to purchase or rent a processing
terminal -- the equipment that merchants run your credit card across when you
charge a transaction. You might also need to acquire special software.
Before getting your merchant account, be sure to find out the full charges that you
will incur for using the service. In addition to the aforementioned chargeback
deposit, investigate hidden equipment costs, setup fees, line charges, bank

About Chargebacks
All major credit card companies offer their cardholders the right to contest charges
on their statements that may be the result of theft, fraud or error.
A customer contacts his/her credit card company and complains that the
merchandise was unsatisfactory, did not arrive as promised, or that the sale resulted
as a result of a lost or stolen card. These contested charges are called chargebacks.
When a chargeback occurs, the merchant will end up reimbursing the issuing bank
the amount of the purchase price, in addition to a chargeback fee that can be as
high as $50 or more. For example, if you sell a book for $20 through a credit card
transaction and the cardholder later contests the sale, you will end up paying your
bank the $20 PLUS a chargeback fee of $10 to $50 dollars. When you add to this
the amount that the book cost you and the cost of mailing, if applicable, you can see
that your losses can be add up quickly.
Banks ask for a sizable deposit to protect themselves in the event that the merchant
is unable to cover the chargeback costs at the time they occur. Merchants who incur
too many chargebacks are at risk of losing their merchant account. Somewhere
between 1-3% of total transactions is usually acceptable.
Chargeback issues are of foremost concern to a merchant hoping to acquire a
merchant account. They can result in serious financial loss.
Note that chargebacks are not the same as the fee you pay for a merchant-issued
refund. The latter might cost you only a few dollars to process.
High Risk Processors
Since so many small businesses are unable to arrange Merchant Accounts, an
industry has arisen to meet the need. High-risk processors are financial institutions
or companies that that issue merchant status accounts to high-risk businesses. In this
case, a high-risk business is one that cannot arrange a Merchant Account through
the bank. These companies offset their risks by charging higher transaction fees and
higher rates than the banking institutions. However, the initial outlay of cash that
you will be asked to put up is usually much less than the large deposits that the
banks require. Some high risk processors might offer other added features such as
shopping cart software, web site templates, forms or secure lines for ordering.
Many companies offer this service. Most are available only to US residents, and
terms of service vary. Read the fine print on the contract and be sure you know all
of the hidden charges that might apply.

Card Service International (http://www.cardservice.com/)
and Electronic Transfer Inc (http://www.chargecentral.com/)
are arguably two of the best-known companies of this type in the US. However,
merchants who live outside the US may encounter difficulties. Refer to the section
on International Merchants.
Internet Merchant Account
An Internet Merchant Account is a special account that permits
the acceptance of credit cards over the Internet. Transactions
are processed online, in real time. While the customer waits, the
system checks the credit card to be sure that it has not been
reported stolen, has not expired, and is listed to the same
address that the customer has provided. If the card is approved, both customer and
merchant are notified that the sale has transpired. This type of account is a stricter
banking relationship than one involving face-to-face transactions. Web transactions
do not gather signatures from purchasers and therefore there is a higher risk of
fraud.
This method of accepting payment is the #1 most important ecommerce method you
can offer your customers. Without it, your sales will be much less than need be.
Many banking institutions are providing Internet Merchant Accounts to eligible
merchants. However, it is even more difficult to arrange this than it is to get a
regular Merchant Account.
If you are accepted for an Internet Merchant Account through your bank, you must
ensure that the online transactions occur over secure lines (often called Secure
Sockets Layer or SSL). In some cases, the bank will provide the secure lines as a
component of their package. In other cases, you will be responsible for making your
own arrangements.
Your web site host might offer secure lines for an additional price, or you can enlist
the services of one of the many companies that provide this service.
Note: If you are making a purchase online, you can tell whether you are on a secure line. In
Internet Explorer, a little gold padlock will appear at the bottom toolbar indicating that it is
secured. In Netscape Navigator, a similar symbol will appear.
Credit Card Processing Services
Similar to high-risk processors, these credit card processing services provide high-risk
merchants with the ability to accept credit card transactions online. Many have
arrangements in place to process all of the major credit cards.
Processing services handle the transactions on your behalf, then issue you payment
for sales according to a pre-arranged schedule. You do not need a secure line at
your own web site, since the actual transaction occurs on the processor's site, not on
yours.

??For other business- related discussion lists, check out the offerings at Yahoo
Groups. http://groups.yahoo.com/
Credit card processing companies charge an array of fees for their service. Since
the processor is essentially taking a risk on your behalf, expect higher transaction
fees than a bank will charge for a Merchant Account. Shop around and compare
rates, but realize that cheaper is not always better. A low-priced service may not be
building the necessary financial reserves and therefore may not have long-term
stability. Remember, if they go broke, you lose your startup fee and any other
monies tied up in their service.
Here are the fees that you might reasonably expect to be charged:
1. A set up fee.
2. A monthly service fee
3. Transaction fees per sale
4. Credit card discount fees (a percentage of the total sale)
5. Holdbacks. As a safeguard against chargeback losses, many resellers will
hold back a percentage of each month's transactions for a period of several months.
Since they do not require the sizable deposit that banks require, they protect
themselves through holdbacks.
6. Chargeback fees. (Can range as high as $50 or more per chargeback)
7. Fees to transact merchant-issued refunds.
One final thought on card processing services. Almost all of the services you
encounter on the Net are available only to residents of the US. Residents of other
countries check the section for International Merchants.
ClickBank Company's card processing service has been highly recommended for
persons selling digital products (files, software, ebooks, digital music, etc.). The
setup fees are modest and the service is said to be available to merchants anywhere.
Use this link for more information about ClickBank.
Setting Up: The Technology
Wondering about what you need to do to get the whole thing set up? Since every
card processing company will have a somewhat different system, it's not possible to
give a specific answer. The following steps are "generally" what will transpire.
1. You apply for the service. The company asks you to sign and return contracts
and provide various information.
2. If monies are going to be transferred into your bank account, the company will
make necessary arrangements with your bank. You will supply the card
processing company with banking information.
3. Once approved with you bank, you can begin setting up your web pages. The
card processing company will supply you with coding that must be incorporated
into a form.
4. You design a form in HTML for each product you are selling, incorporating the
company's coding that you were given. The form will also contain information
such as the name of the product, the quantity being purchased and the selling
price. Some card processing companies supply software that generates forms
for you. If not, you will have to make your own. If you know some HTML,
simple forms are not difficult to create.
5. You upload the web page containing the form to your web site. When a
customer fills in the form and submits it for a purchase, the request is sent to
your card processor's secure web site. There, the customer will provide
confidential credit card information. When he or she clicks the final "send"
button, the technology processes the sale in real time while the customer waits.
The transaction will be either approved or disapproved. Both customer and
merchant will receive a message indicating the details of the sale.
6. If the sale is approved, you will then fulfil the order.
7. The card processor will likely provide you with a secure web page where you
can go to edit your product list, check on sales figures, generate fund reports or
process refunds.
8. According to the schedule stipulated in your sales contract, the card processor
will transfer funds from sales into your bank account or otherwise pay you the
money owing, minus fees and expenses.
Want to know how to create a form
Shopping Carts
Do you need shopping cart software? Strictly speaking, no. You can
process your ecommerce transactions with nothing more than the HTML
form described above. And if you have only a few products to sell and if the budget
is tight, you might want to go that route and bypass the shopping cart until later.
However, if you have many products and complex shipping requirements, then
shopping cart software is invaluable. Good shopping cart software will collect
complex information regarding shipping methods, taxation, quantities and other
concerns. Moreover, most online shoppers are accustomed to using this software.
So where do you get shopping cart software?
??If you are using a "one stop shop" service, the shopping cart software is likely
to be included. More about one stops shops later.
??Your web host might offer shopping cart software as part of your ecom
package, or for an additional fee.
??You can find free or low priced shopping cart scripts on the Web. Many of
these free or budget scripts are difficult to install. Unless you are technically
astute, or know someone who is, they might not be your best choice.



3. Once approved with you bank, you can begin setting up your web pages. The
card processing company will supply you with coding that must be incorporated
into a form.
4. You design a form in HTML for each product you are selling, incorporating the
company's coding that you were given. The form will also contain information
such as the name of the product, the quantity being purchased and the selling
price. Some card processing companies supply software that generates forms
for you. If not, you will have to make your own. If you know some HTML,
simple forms are not difficult to create.
5. You upload the web page containing the form to your web site. When a
customer fills in the form and submits it for a purchase, the request is sent to
your card processor's secure web site. There, the customer will provide
confidential credit card information. When he or she clicks the final "send"
button, the technology processes the sale in real time while the customer waits.
The transaction will be either approved or disapproved. Both customer and
merchant will receive a message indicating the details of the sale.
6. If the sale is approved, you will then fulfil the order.
7. The card processor will likely provide you with a secure web page where you
can go to edit your product list, check on sales figures, generate fund reports or
process refunds.
8. According to the schedule stipulated in your sales contract, the card processor
will transfer funds from sales into your bank account or otherwise pay you the
money owing, minus fees and expenses.
Want to know how to create a form? 
Shopping Carts
Do you need shopping cart software? Strictly speaking, no. You can
process your ecommerce transactions with nothing more than the HTML
form described above. And if you have only a few products to sell and if the budget
is tight, you might want to go that route and bypass the shopping cart until later.
However, if you have many products and complex shipping requirements, then
shopping cart software is invaluable. Good shopping cart software will collect
complex information regarding shipping methods, taxation, quantities and other
concerns. Moreover, most online shoppers are accustomed to using this software.
So where do you get shopping cart software?
??If you are using a "one stop shop" service, the shopping cart software is likely
to be included. More about one stops shops later.
??Your web host might offer shopping cart software as part of your ecom
package, or for an additional fee.
??You can find free or low priced shopping cart scripts on the Web. Many of
these free or budget scripts are difficult to install. Unless you are technically
astute, or know someone who is, they might not be your best choice.

??You can purchase shopping cart software from one of the many developers
that sell carts online. Prices vary considerably. You can pay anything from $100
one time fee to several hundred dollars a month rental. Shop around. You don't
want to pay for features that you don't need.
Note: The shopping cart software you use must be compatible with the server
that stores your web site and with the card processor's technology. To find this
information you will quite possibly have to consult with the software developer,
your web site administrator and the credit card processor's tech support people.
Ecommerce: The Dark Side
Credit Card Fraud:
When a valid credit card falls into the hands of fraud artists, the thieves typically
purchase as much as they can before the owner reports the theft. The most likely
items to be purchased are those that can quickly be converted to cash -- electronics,
computers or jewelry. Merchants selling those items online will be particularly
vulnerable to fraudulent attempts.
Credit card fraud artists also "test" cards in an effort to learn whether the card is
valid. If your web site becomes known as a good "test site," you will be in danger
of having your merchant status revoked. This is one of the reasons why you want to
ensure that you card processor is using top notch security technology.
Internet Shoplifting
Many Internet merchants are dismayed to learn that their biggest
challenge comes from dishonest customers and not credit card fraud.
It goes like this: In many countries (including Canada and the US),
Internet sales are governed by the same laws as Mail Order Sales. With both
Internet and Mail order sales, the customer is not present at the point of purchase
(POP). Therefore, there is no signature given to indicate that delivery occurred.
Customers can contest a sale within 30 days of purchase, stating that the item was
not delivered as promised, that the item did not meet expectations or that the
transaction was the result of a lost or stolen credit card. In all cases, the merchant is
offered an opportunity to contest the chargeback. However, without a signature to
indicate delivery, there is often little that the merchant can do.
While these policies are intended to protect consumers from dishonest and unethical
merchants, unfortunately they do not protect honest merchants from unethical
consumers.

All too many consumers are aware of this and use it to their advantage. The strategy
is simply to order an item on the Internet then contest the charge or ask the
merchant to issue a refund. The merchant has little option but to comply.
Merchant issued refunds are preferable, since the fee for this transaction is usually
only a few dollars instead of the many dollars that a chargeback will cost. However,
if the item sold was hard goods (i.e. a physical item like a book or a computer), the
merchant will lose the cost of the item plus the cost of shipping. If proof of delivery
is available, a merchant might succeed in getting the consumer to return the item --
but will it be in good enough condition to resell? If the consumer lives in a
different country than the merchant, it can be next to impossible to get an item
returned.
If the item sold is soft goods (i.e. electronic files, software, and ebooks), the
merchant cannot request the return of the item, since digital goods can be replicated.
At least with soft goods shoplifting, you are not out the cost of mailing or the price
of the product.
Piracy
If you are selling soft goods, piracy is a problem. Since digital files can be
replicated readily, there is little to stop a consumer from purchasing your
product with a credit card, asking for a refund or chargeback, then
distributing the file to other people. Some sell it to others claiming the
product to be their own.
Technologies are coming available that will prevent or at least make piracy more
difficult. However, at this time, many of these technologies are beyond the budget
of the small or home business.

Or Pace Anti-Piracy
http://www.paceap.com/default.html
Or Internet Marketing Center's eBook Pro
Tips for Protecting Yourself Against Online Credit Card Fraud
Please don't be deterred by the hazards mentioned above. Take proper precautions
and you will find that the majority of your transactions are successful.
1. If you are doing real-time processing, ensure that your technology is up to
date and equipped to recognize fraudulent attempts. If you are using a card
have the money transferred into his bank account, credited to his charge card or he
could request that the service cut a paper check.
1. Paypal. (www.paypal.com).
Rated highly by Forbes and others. Offers both personal and business accounts.
Some availability to persons living outside the US.
2. MoneyZap(www.moneyzap.com)
From Western Union. Transfers directly from bank accounts.
3. Payplace ( www.payplace.com)
Better suited for business use than for consumer use.
4. Billpoint (www.billpoint.com)
eBay's own technology. Takes a cut of auction transactions.
One Stop Shops
Recently, with the huge interest shown in ecommerce, a multitude of services and
products have become available. It's now relatively simple to find a service that will
broker your Internet Merchant Account, as well as providing web site storage, a
template for designing your site, shopping cart software, a form generator, a secure
line for safe online ordering, and more.
Visit Google (www.google.com) and run a search for "ecommerce solutions."
This ultimate all-in-one ecommerce tool is highly recommended for beginners and
experienced web builders alike.
International Merchants
Unfortunately, for merchants living in countries other than the US, many of the
services available on the Internet are available only to US merchants.
AND -- a word of warning! Many of the businesses offering ecommerce services
on the web are run by resellers who do not fully understand who is eligible and who
is not. You can waste many hours and many dollars with some of these services
before discovering that the service isn't available in your country.
For example, some service reps will tell you that the service is available to you if
you have a US Postal Box and a US bank account. It is not difficult to acquire a US
Postal Box if you are able to visit that country, and your own bank will probably be
able to set up a US bank account for you. However, this is not the solution. You will
discover later that you really need an actual business address in the US and a
business bank account that is set up in the US. This will require a US taxation
number. To get a taxation number, you will have to incorporate your business in

A P2P service mentioned previously. PayPal offers limited services to people
living in 25 countries other than the US. As a non-US resident in one of the
participating countries, you can use PayPal to credit and debit your credit card, but
you cannot transfer money to or from your bank account. As of February 2001,
PayPal made bank account transfers available to Canadians.
Definitions
Commerce Service Providers (CSP)
CSPs are business or web sites that provide ecommerce solutions.
Digital or Electronic Cash or E-cash or Ecash or Digital Money
These terms are also used interchangeably, and they refer to any of the various
methods that allow a person to purchase goods or services by transmitting a number
from one computer to another. The numbers are issued by a bank and represent
sums of real money. Digital cash is anonymous and reusable.
Unlike credit card transactions, the merchant does not know the
identity of the shopper.
Electronic Checks
Customers pay for merchandise by writing an electronic check
that is transmitted electronically by email, fax or phone. The
"check" is a message that contains all of the information that is found on an
ordinary check, but it is signed digitally, or indorsed. The digital signature is
encoded by encrypting with the customer's secret key. Upon receipt, the merchant
or "payee" may further indorse by encoding with a private key. When the check is
processed, the resulting message is encoded with the bank's secret key, thus
providing proof of payment.
Various companies are selling Electronic Check software and services.
Electronic Wallet
Electronic Wallets store your credit card numbers on your hard drive in an
encrypted form. You then make purchases at Web sites that support that particular
type of electronic wallet. By clicking on a Pay Button, customers initiate a credit
card payment via a secure transaction enabled by the electronic wallet company's
server.
Electronic Commerce or Ecom or Emmerce or EC
These terms are used interchangeably, and they all mean the same thing - the
paperless exchange of routine business information using Electronic Data
Interchange (EDI), email, electronic bulletin boards, fax transmissions and
Electronic Funds Transfer. It refers to Internet shopping, online stock and bond
transactions, the downloading and selling of "soft merchandise" (software,
documents, graphics, music, etc.), and business to business transactions.
Extranet

An extranet is an extension of a corporate intranet. It connects the internal network
of one company with the intranets of its customers and suppliers. This makes it
possible to create e-commerce applications that link all aspects of a business
relationship, from ordering to payment.
Disintermediation
Disintermediation is the process of bypassing retail channels or mail order houses
and selling directly to the customer.
Hard Goods vs. Soft Goods
Hard Goods are items that exist in the real world, as opposed to soft goods, which
exist virtually or electronically. For instance, an Internet merchant selling a book
that is shipped to the customer in a print version is selling hard goods; a merchant
offering a book for download in electronic format is selling soft goods.
High Risk Processors
High risk processors are financial institutions or companies that that issue merchant
status accounts to high risk businesses. They offset their risks by charging higher
transaction fees and higher rates than to the traditional banks.
Immerce
Immerce is the new term being used for commerce that is transacted totally over the
Internet.
Merchant Account
A Merchant Account is a relationship between a business (i.e. a merchant) and a
merchant bank, which allows the retailer or merchant to accept credit card payments
from customers.
Microtransactions or Micropayments
Microtransactions are transactions of tiny amounts - a few cents or a few dollars,
typically made in order to download or access graphics, games, and information.
Telephone Billing Systems
A very new approach, telephone transactions allow the customer to purchase an
item or service, and the amount will be billed to his or her telephone bill.
Beyond Ecommerce
Collecting money is one aspect of ecommerce. Okay, it's a very important aspect. If
you don't have that part figured out, why bother?
But once you know how you are going to collect you money, you'll need to think
about marketing your product and other related issues. Follow this links for
invaluable products and services -- some of them free.