Startups: What You Need to Know About Accepting Credit Cards on Your Website

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If your online startup takes payments from customers, you need to accept credit cards. There really isn’t any way around that. Now, you could just add a PayPal button to your site and collect customer payments that way, but it’s not always ideal. Sure, it’s quick and easy, but it doesn’t allow for very much branding, and not all of your customers will be comfortable using the site to send money.

Therefore, to support a professional image and provide the best possible service to your customers, you need to find a better way of accepting credit cards on your site. As with anything having to do with your business, you have some important things to think about before you get started with this.

1. Where Is the Money Going?

Obviously, the money that you collect from customers goes into the company’s coffers. But there are two ways to do this: Sending the money directly to your bank, or to a payment processor that then delivers the money to your account.  Each method has its pros and cons, and you’ll need to weight them against each other.

To send credit card payment funds right to your bank account, you will need to establish an Internet Merchant Account with your bank. When you do this, your bank acts on your behalf as the “acquirer” of the funds, confirming the availability of funds, collecting them, and depositing them into your account. If you choose this route, you will also need to choose a payment service provider (PSP) to serve as a type of point-of-sale terminal, collecting the card details and scanning for fraud and other security issues, before sending the information to your bank for processing.

You’ll have to pay fees for both providers, and your bank is likely to require that you adhere to strict security requirements in order to comply with payment card security standards. However, your PSP is likely to supply a wide range of customized options so you can create a system that best meets your needs, including meeting the requirements of applicable PCI compliance levels.

The other option for collecting credit card payments is to use a payment processing gateway to collect your payments for you, eliminating the need to set up an IMA and PSP. PayPal and Google Checkout are two of the most popular options for this type of setup, but there are some drawbacks. While they are easier to install on your site from a technical standpoint, they also redirect customers to their site to make payment. This can cause concern among customers, and doesn’t support your company branding. In addition, some companies will hold your payments for up to 60 days before depositing them, and you are likely to pay higher fees than you would with an IMA/PSP arrangement. That being said, if you are a relatively new business, establishing an IMA can sometimes be challenging, and using a third-party payment gateway can help you get up and running and build a solid trading history.

2. The Checkout Process Matters

Once you have determined how you’re going to collect funds, you need to start thinking about your checkout process. On average, about 70 percent of online shopping carts are abandoned during the checkout process — and almost half of them are because the checkout process is too long or complicated.

You can reduce abandoned carts and increase sales if you keep a few things in mind when setting up the checkout process:

  • Allow customers to check out without setting up an account. Many people don’t want to do this because they fear spam emails, and will buy elsewhere if it is a requirement.
  • Only request relevant information. Again, if the process takes too long and asks for too many details, customers will click away.
  • Include clear calls to action and a visual representation of the checkout process to help guide customers through the process quickly.
  • Include visuals of the items being purchased in the cart, as well the option to edit items (change quantities, sizes, etc.) from the checkout page.

Keeping the checkout system streamlined, but still informational, will keep customers engaged in the purchase process.

3. Be Mindful of Security

Finally, while your payment processor will help you comply with security regulations, you should still reassure your customers that their payment information is safe. More than half of customers will cancel a transaction due to concerns about security, so make it clear that you take security seriously. Implement multi-layer authentication for those with an account, use SSL protection, display SSL and PCI badges on your site, and choose a payment processor that uses address verification and requires a card ID number to authenticate purchases to give your customers peace of mind.

Accepting credit card payments on your site is key to your bottom line, but you need to do so safety and efficiently. Consider these issues before you design your site, and your startup will get off the ground more smoothly.


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