Mike de Sousa, Director, AbleStable®
article provides some advice for would-be merchants
on how to ensure internet transactions are as pain
free as possible. If you are a creative professional
who is going to sell products and/or services directly
from your web site there are a number of important
issues you'll need to bear in mind...
of the most significant decisions an Internet business
takes is whether to handle on-line transactions.
The first question you'll be asked is whether you
have a merchant account. If you don't you might
like to skip to the next section below entitled
Options for start-ups: hand over
Ensure your transaction budget covers all the bullet
points below. If you are not confident your business
can handle any one of the following issues our advice
is to entrust a clearing bank or Internet payment
transaction service to undertake your transactions.
These services have invested heavily in security
measures and transaction protocols that are designed
to ensure the user and goods provider enjoy a trouble
free payment pathway.
If you have a merchant account or are able to open
one and you are confident about your companies ability
to conduct your own on-line transactions there are
a number of important issues you should consider
before taking the plunge:
Does your company have experience in implementing
an effective server Firewall? We're not talking
about an off-the-self solution here. Your systems
must be water tight in order to prevent fraud,
and should be custom installed and continuously monitored
by expert staff. If credit card data from customers
can be hacked and accessed your company will be
potentially liable if it is shown your systems
are not up to scratch.
Is your data completely secure? If you answer
yes to this question you're kidding yourself. Consider
what risks you are willing to accept and make a
Has your company developed internal security
protocols that prevents any unauthorised member
of your staff from accessing sensitive data on your
Does your company fully comply with the Data
Protection laws of your country?
Do you have real-time backup procedures in
place if your secure server fails?
Do you have insurance against potential legal
action from clients regarding disputed on-line
Finally, you must also ensure your web site supports
transaction errors and carries FAQ's and a help
section on your payment procedure.
for start-ups: hand over your transactions
For start-up businesses opening a merchant account
can appear a catch 22 situation as you'll require
at least six months evidence of your ability to
trade in a responsible manner before being considered
for a merchant account. All is not lost however
as there are a number of specialist services such
as PayPal, WorldPay and NetBanx who provide affordable
solutions to single or multiple on-line transactions
without the need for merchant status.
In all the above scenarios the customer is taken
to a different site when making payment then returned
to the original site upon payment completion. If
you keep the customer informed at all times of the
payment process, and provide clear information about
the transaction service they will be visiting, customers
are generally very happy to move from your server
to a secure server and back again.
PayPal offers a model where prospective customers
open an account at the PayPal web site and pay for
goods via their PayPal account in the knowledge
their card details are never passed on to the goods
provider. The down side here is that despite the
tens of thousands of Internet users who use PayPal,
it is not a universal payment process like Visa.
Users will in all probability not carry on with
a payment process if they are required to consider
a new third party registration, regardless of its'
status or how simple it is. PayPal does however
work for businesses who are targeting particular
markets where their potential clients are of a certain
demographic (below 30 years old for instance) and/or
more likely to have a PayPal account.
Companies such as WorldPay and NetBanx offer traditional
merchant accounts but also provide 'bureau' transaction
services. For an additional percentage fee they
will handle your on-line transactions. You'll need
to visit as many transaction services as possible
in order to find the service that best fits your
needs. The costs associated with this method of
handling on-line transactions is greater (up to
around 8% of each transaction cost) but the advantages
are great as all card data and payment handling
is the responsibility of the transaction service.
What is a chargeback?
you do decide to go ahead with handling on-line
transactions your greatest challenge will be how
you deal with chargebacks. A chargeback occurs when
money is deducted from your account. Chargebacks
can occur for a wide variety of reasons: double-charging;
credit card expiration; bank error; and customer
disputes. If chargebacks frequently occur against
a merchant account, there is a possibility that
merchant will loose their account.
Once a merchant has lost their account they are
placed on the Visa/MasterCard MATCH list for several
years which all Merchant Account Providers have
access to. If a merchant is found on the list it
is unlikely a new merchant account will be opened
under that business name.
common sense advice
concern about online credit card fraud and chargebacks
is rising at a significant rate. As e-commerce continues
to flourish the number of instances of credit card
fraud and chargebacks will continue to mount higher.
you'll find six straight forward guidelines to help
keep this unwelcome feature of Internet e-commerce
1. On your order confirmation page provide the customer
with: the product and/or service the customer has
paid for; and the name, phone number, and e-mail
address of your company (or the name that will appear
on the customers bill) so your customer will recognise
it when it appears on their monthly credit card
2. Include the same information above (1) in the
e-mail confirmation that your customers get when
an order is placed.
3. Use Address Verification. People ordering products
using a stolen card number will never use the real
cardholder's billing address, so this is your chance
to stop the order before it's too late.
4. If an order seems suspicious, phone or e-mail
the customer and attempt to verify anything you
can about them.
5. If you ship a product, include the customers
invoice. Always keep copies so if you're ever challenged
you have records.
6. Be wary of accepting orders from people who used
a free e-mail address when ordering (i.e. Hotmail,
Yahoo, etc.). Tracking people who used a free e-mail
address is almost impossible, it's much easier for
them to get away then if they used their Internet
Service Provider (ISP) e-mail address. You may wish
to add certain conditions in your payment process
about what e-mail addresses are acceptable.
the end of this article you're probably wondering
why any business in their right mind would directly
support on-line transactions when all the responsibility
for them can be so easily handed over.
The only persuasive reason for handling your own
on-line transactions is to reduce your transaction
costs and increase profits. If you think the investment's
are worth it because you've carefully costed out
all the alternatives and you're willing and able
to meet the additional development and deployment
costs, you may decide to dive in.
Although there are many companies who get away with
implementing far less than we've advised here, the
bottom line is that it's your business, your livelihood,
and your responsibility. Always remember, if a customer
has a bad experience with your payment procedure
you'll loose their business on a permanent basis.
de Sousa is the Director of AbleStable®.
Mike has been commissioned as an artist, music
composer, photographer, print and web site designer,
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