in e-b
usiness payment mechanism
Answers
Explanation:
Payment Mechanisms in E-Business
Accepting credit cards can boost sales.
Whether you sell physical products, downloadable products or freelance services online, you need a way to accept payment. The method should require the least effort from the customer or client. Requiring her to send a check in the mail rather than clicking on a payment button might cost you customers. If you use a shopping cart system, make sure the payment method is fully integrated with the cart system.
Merchant Account
A merchant account is necessary for your e-business to accept credit and debit cards directly. You complete an application, along with paying an application fee. The bank issues the merchant account that is tied to your business bank account. When a customer uses her credit card to pay for your merchandise, the transaction is processed through a payment gateway that encrypts the credit card information before transmitting it to the bank. The bank accepts the transaction and sends money to your business bank account, sometimes as quickly as two days. You're charged a percentage of the sales price, plus sometimes a per-transaction fee and monthly fee. You can also accept ACH -- Automated Clearing House -- payments or electronic checks with a merchant account.
Third-Party Payment Processing
Several services offer third-party processing of credit and debit cards in addition to e-checks. Usually, there's no credit check, although there may be an application and fee. You set up a code on your site that takes the customer to the third-party processor to pay for your merchandise. The processor's fee is subtracted from the purchase price and retained by the service. Third-party processors include Paypal, 2Checkout, BrainTreePayments and SquareUp.
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Small Business»Money & Debt»Businesses & Accepting Credit Cards»
Payment Mechanisms in E-Business
by Katie Jensen
Accepting credit cards can boost sales.
Whether you sell physical products, downloadable products or freelance services online, you need a way to accept payment. The method should require the least effort from the customer or client. Requiring her to send a check in the mail rather than clicking on a payment button might cost you customers. If you use a shopping cart system, make sure the payment method is fully integrated with the cart system.
Merchant Account
A merchant account is necessary for your e-business to accept credit and debit cards directly. You complete an application, along with paying an application fee. The bank issues the merchant account that is tied to your business bank account. When a customer uses her credit card to pay for your merchandise, the transaction is processed through a payment gateway that encrypts the credit card information before transmitting it to the bank. The bank accepts the transaction and sends money to your business bank account, sometimes as quickly as two days. You're charged a percentage of the sales price, plus sometimes a per-transaction fee and monthly fee. You can also accept ACH -- Automated Clearing House -- payments or electronic checks with a merchant account.
Third-Party Payment Processing
Several services offer third-party processing of credit and debit cards in addition to e-checks. Usually, there's no credit check, although there may be an application and fee. You set up a code on your site that takes the customer to the third-party processor to pay for your merchandise. The processor's fee is subtracted from the purchase price and retained by the service. Third-party processors include Paypal, 2Checkout, BrainTreePayments and SquareUp.
Third-Party Retail Accounts
Third-party accounts allow you to accept credit and debit cards without establishing a merchant account. When a customer buys your product, you're in effect selling the product to the third party, who then accepts payment from your customer and sends you the money or direct-deposits it into your bank account, less a fee for the service. For example, say you sell downloadable books on your site. The customer buys the book by clicking on the link that takes her to the third party. She pays the retailer and is taken to where she downloads the book. Clickbank handles downloadable products, as well as print books. Amazon accommodates all sorts of products, both physical and downloadable.
Escrow Accounts
When you're selling high-priced web-based services such as consulting and web design, you and the client may prefer to go through an escrow account. The customer doesn't want to pay several thousand dollars for a website and not be assured you'll transfer ownership of the site. You don't want to transfer the website or perform the work, then not get paid. An escrow service releases the funds from the customer at the same time the ownership is transferred. It works much like a title company in real estate transactions.
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