Accepting Credit Cards Online

by: AY Software Corporation

Accepting online credit card orders is a must for everyone who does business on the Internet. If you do not accept credit card orders you could lose at least 85% of your potential orders. Most online businesses report that 95% of their orders are through online order forms.

Accepting online credit card orders is easier than it appears. To accept online credit card orders, you need three basic things:

  • Merchant Account – See our merchant account provider reviews if you need to set up an account!
  • Software
  • Internet Service Provider

Merchant Account:

A Merchant account is a special account that you have with a financial institution in order to accept credit cards. Even if you already accept credit cards for your offline transactions, that may not be enough. Credit card companies consider Internet transactions to be riskier than other standard transactions; so, not all accounts permit Internet transactions. If your current account does not allow Internet transactions, you have to contact your financial institution to correct this.

There are many brokers available who can open a Merchant account for you. Their conditions for opening an account may vary drastically, which can make it difficult for you to decide which account is best for you. Most brokers will offer to sell or lease expensive equipment to you, when they open your account. Do not be fooled; That is how they make their money. You do not need any software or equipment to open a Merchant account. To open an account, all you should have to do is pay is processing fee, which should not be more than $100. That should be enough for you to start accepting credit cards.

Set up a merchant account with our Top Featured Provider:

Merchant Warehouse



To maintain your merchant account, you must pay the following monthly fees:

  • Discount fee – For Internet sales, this fee should be between 2.5% and 2.9%. You should be suspicious of any discount rate that is less than that.
  • Transaction fee – This fee should be between $0.20 and $0.30 per transaction.
  • Address Verification Fee (AVS) – This fee should be $0.05 per transaction. Some (very rare) financial institutions may not require this service, but it is a must for you because it helps to prevent fraud.
  • Statement fee – This fee is usually between $10 and $15 per month.

For example, if you sell software applications for $20 , and you sell 20 applications per month, your fees are only $25-30 per month, which is approximately 7%. So, even with a small sales volume of $400 per month a Merchant account is not expensive. We will discuss how to select the best account in one of the next issues of our newsletter.


Most brokers who open Merchant accounts offer software or hardware to process credit cards. If you want to accept credit cards over the Internet, you need a software solution, not a hardware solution. Even though a hardware solution saves you $50-$100, you will have to enter all your transactions manually. With a software solution, you will never have to enter your transactions manually.

Be aware! Some brokers offer software solutions for as high as $2,000, which is way overpriced. The software should cost about $400. Sometimes, brokers may also offer you programming or software setup services at an additional cost. Do not pay for these services. All of the software comes with technical support from the manufacturers, and the bank will give you all the information you need.

Instead of selling you a processing software, you may be offered a processing software lease at a certain price per month. The lease may seem like a good solution, but it’s not. For example, if you pay $29.95 during 3 years (sometimes 4), you will pay $1,078.20. Isn’t that too much to pay for $400 software?

You don’t have to lease or buy your own software if you decide to do real-time processing by plugging into an Internet Service Provider (ISP) that has the processing software on its server. However, you may end up spending too much on an ISP. You must calculate all of the costs and benefits carefully before making that decision.

Internet Service Provider:

Choosing an Internet Service Provider (ISP) is not easy. Some providers will provide you full service and all of the software to process your credit card orders, while others will provide only basic services. Some providers will charge $150-200 per month, or even more, while others will charge $9.95 per month.

What are the basic things that you need from an ISP? The first thing you need is a Secure Server. Many people believe that you must have a Secure Server for security and they will not place an order unless you have a Secure Server. Yet, a Secure Server is not expensive. You do not have to pay $100 a month to use a Secure Server. Many ISPs provide this server for free. In any case, you should never pay more than $10 per month for this service. The best way for you to gain access to a Secure Server is through the ISP that hosts your Web site, which is usually the least expensive; however, you may use any ISP that you want. If you have your own domain name and you want to use it as a secure server, you must buy your own certificate, which costs between $100 and $350 per year. We will discuss Secure Servers and certificates in detail in the next issue of our newsletter.

After you have your Secure Server running, you need the software to display order forms, store orders etc. You can use anything from homemade scripts to sophisticated shopping carts. The price for this kind of software ranges from $30 to $20,000, or more. The price depends on what you need. There are thousands of products available, which makes choosing the right product for your needs very difficult. When we were looking for a software to process our orders, we did not find a product that would meet our needs, so we developed our own software, and we are planning to make it available by the end of 1998.

However, you do not have to have any software to process your orders. You can easily find an ISP that will process your orders for you, but it will cost you more money. Instead of paying $20-30 per month for an excellent Web Site with a Secure Server, you may have to pay $100-200 per month. This processing service is a waste of money. For example, if you buy a software for $500 and then only pay your ISP $20 per month for Secure Server services instead of paying $100 per month for Secure Server and processing services, your initial software investment will be paid off in six month, and the software is yours. That way, if you decide to change your ISP, you will not have to invest again.

There are two methods that you can use to process credit card orders. The method you use depends on what happens when the customer presses the ‘Purchase’ button on the form. With the first method, the credit card is authorized immediately and the customer receives an immediate answer. With the second method, the information is delivered to you, so that you can process the order later. Both methods have their advantages and disadvantages; however, they are not in the scope of this article. We will discuss these topics in one of the next issues of our newsletter.