X-Cart:Understanding Online Payments

In order to accept credit card payments online, you need:

1. An Internet Merchant Account (IMA)
2. A payment gateway

Internet merchant accounts are merchant accounts specifically designed for processing credit cards online. Typically, the Internet version has more security controls than your traditional merchant account.

A payment gateway is needed to move the money between your shopping cart and the banks or credit card companies involved with the transactions.

All-in-One Payment Solutions and Payment Gateways

There are two methods for acquiring an IMA and a gateway. They are All-in-One Payment Solutions (IMA and gateway are bundled together) and Payment Gateways (Mix and match your IMA and gateway).

With an all-in-one payment solution your IMA and gateway are acquired from a single vendor. This option is beneficial if you want to:

• Manage just one vendor for all online payments
• Get all of your support from a single source
• Use easy-to-access reporting for all payment methods
• Integrate only one application on your website

Payment gateways combine separate IMA and gateway providers. Consider this if you already have a physical store presence with IMA capabilities from your existing bank. A payment gateway allows you to:

• Keep your existing IMA as you expand online
• Connect a compatible gateway with your existing IMA
• Retain the same gateway if you change IMA providers

Most banks offer some form of a merchant account, but they don't specialize in processing credit cards online.

Third-party vendors like PayPal can be a better option because processing online payments is all they do. Unlike most of these specialists, PayPal can give you an Internet merchant account and payment gateway in one solution (See PayPal Payments Standard, PayPal Payments Advanced and PayPal Payments Pro). With such an all-in-one solution from PayPal, you will be able to accept all major credit cards and PayPal payments.

Alternative Methods of Payment

Because of credit card fraud and identity theft concerns, some customers are uncomfortable providing their credit card information on new websites or any that are unfamiliar to them. You can service those customers by accepting alternate payment methods like PayPal. This brings us to Alternative Methods of Payment. With this option, many businesses — especially new or small businesses — find they can:

• Increase sales on their site. Customers can select an alternate payments provider that they already trust.
• Reduce shopping cart abandonment.
• Add flexibility for their customers. Customers can pay without sharing personal and credit-card information with businesses.