How to Accept Credit Card Payments

Filed in archive financing on October 24, 2006

Let me start out by how a merchant account works. In order for you to accept credit card payments, you need to have a merchant account. You need to contact a bank or a credit card processor for this. They will provide you with a facility to process credit card transactions.

In a brick and mortar business, they would usually provide you with a credit card swipe machine, but for online businesses, they'll provide you with a shopping cart or a site where you could send your clients to key in their credit card details.

If you are going to bill your client for $100 (for a product or a service), your client pays $100 to the credit card processor. Now the credit card processor won't be paying you the same $100. They'll deduct some fees either a percentage of the sale (they call it discount rate), or a flat per transaction fee. Sometimes both. This is where they earn. You'll probably end up getting $95 out of the $100. Not bad if you ask me.

In choosing a credit card payment processor, check out the fees and compare which one will work best for your business. Some have a monthly fee, a statement fee, a transaction fee. Check out the different discount rates between payment processors, and also check out how and when will you get the payment. Some have a minimum amount before they send you the payment. Others may charge you with wire transfer fees.

There are a lot of payment processors. Here's just a few.


CardService
Verisign
MCVisa
But I personally use 2co.com