It's All Geek To Me - September 15th 2004

Here at KISS we specialize in sites that make money for people – kind of falls under the simple premise that your site needs to make at least a thousand dollars a month in order for KISS to be able to do all that gee whiz stuff that makes our clients successful.

Getting paid online always has been – and remains – the single biggest issue for closing website sales. It is true that things are more secure than ever, but fear of giving credit card numbers remains the number one impediment to closing sales. (This fear is totally without merit; every Internet credit card problem ever is the result of the company getting hacked after the transaction is done, not the result of intercepted transactions).

So here is our handy dandy guide to the basics of getting paid online and what business owners need to know about it.

First, if you sell anything online, in any manner, it is valid to say you are engaged in e-commerce. You might have a printable order form where visitors are supposed to mail you a check, which can work (although it has a miserable conversion rate) – but for the purposes of this newsletter we are talking about credit card payments.

Merchant Accounts
So all roads lead to Visa, Mastercard, Amex, and Discover – along with a few minor players who offer other types of cards. In order for your business to accept these credit cards you need a merchant account. This involves filling out some paperwork and agreeing to fees, generally the percentage of each sale you pay plus monthly service fees.

To put it very politely – the merchant account industry is a complete mess. This is worse than buying a used car, and you should be very aware here. The basic problem is that everyone involved anywhere on the food chain sells merchant accounts. Your bank offers it, your point of sale system company, lots of independent operators, the folks at quickbooks, the list goes on and on. (starting to feel like long distance service yet?)

Typically you get what you pay for – does that 1.2% processing rate seem too good to be true? It probably is, as there is a huge setup fee or a requirement that you sign a 5 year commitment. You want to be sure to understand the total amount of the three fees you'll pay here: Setup, % of transactions/fixed price per transaction, and the monthly fees. These are based on the type of business you are in, your average transaction, and your credit rating.

Here at KISS we paid no setup fee for our account, 2.3% plus thirty-five cents per transaction, and a monthly fee of $18 – no commitment required on our part here.

The reason there is so much fine print in these agreements is that you'll discover the above is a little bit conditional – like credit cards issued in foreign countries carry a higher percentage of the sale cost.

Live Payment Gateways
So there are two parts to getting paid online - the front end of the transaction the customer sees and the back end where it is processed. Some shopping cart systems don't use gateways; they simply collect the credit card info in a secure manner and deliver it to the site owner. The order is then processed in the 'usual' way for the site owner, same as if someone called it in on the phone or the info came by carrier pigeon.

Then, there are live payment gateways – these are systems that allow customers at your site to be charged for their purchases in real time as they place the order. Literally as the person is placing the order, the shopping cart uses the live payment gateway site to charge the customer card (the customer never sees this happen – they just get that “approved” message). Live payment gateways reduce the work to process orders and are required for any digital product a person would be downloading immediately.

This is where it gets confusing – most merchant account providers give you some type of live payment gateway with your account, but much of the time it is not what you want. There are basically two industry standard live payment gateways – also known as the biggest one and the best one. The largest provider is a company called Authorize.net - they provide the Authorize.net payment gateway. This is a really solid gateway and one of the nicest things about it is that pretty much every decent shopping cart system has the necessary programming to work with this one already built in. They have a nice little diagram of how all this works at their site:

It costs about $15 a month to have this, and it is the correct solution for the vast majority of our customers. (KISS pays $11.80 per month for this)

Then there is the best one – if you have purchased lots of stuff online it is likely you've seen a gateway/shopping cart brainfart – which made you scream a bit, pout at the screen, and then go somewhere else. These are rare, but they do occur – and for higher volume sites this is more of an issue. You can also have problems with overwhelmed servers where, literally, there is more data being sent than can be handled. This is where Payflow Pro comes in. Payflow Pro is a truck - it will handle heavy volumes and lots of server calls without brainfarting... but of course it costs $60 a month plus a $250 setup fee.

Your merchant account provider may or may not include a live payment gateway, an important consideration to understand the total price you'll pay for all the services you'll need.

Trust and Security
This remains the biggest issue with getting paid online, and you want to be sure your checkout type pages are set up with a few common features. First – it must be secure (https://whatever.com), which means either sharing the secure certificate of your hosting company or buying your own certificate. All this does is prove that the website you are on is indeed who they say they are and the info is encrypted. Second – tell the world it is secure. Often this is a click to verify graphic, some text – you must make sure it is crystal clear and apparent the info is secure. Third – tell the world your policies. This is the trust part: your intention never to rent , trade, or sell their info and not ever spam them needs to be made clear.

In an article like this it is important to mention PayPal – the same way eBay will let you try to sell something online without a website, PayPal is a great way to try out credit card payments with no upfront costs or commitments. But – PayPal does make you look like a garage sale, so while good for trying things out it is not appropriate for real e-commerce. This is not just a snobby webmaster prejudice of mine; it shows in the conversion rates of sites (without PayPal more people buy it so those fees prove to be worth it).

Finally
So – this is a simple and yet challenging thing. You want to be very careful when buying a merchant account – know exactly what you are paying. A live payment gateway is necessary for solid online sales, and you want to be sure to keep your security/trust issues in mind.

FYI – KISS uses a company called Transaction Resources, Inc. and we'd recommend TRI very highly. Joe Forgione is the person to speak with there and he is joe.forgione@transactionresources.com or 508-385-6201. (No we're not getting any kickback...seriously, he's a good guy.)

Tech Tip

by Michael McGrath

One of last week's editions of ZDNet Tech Update reported a marked rise in the migration from Microsoft Internet Explorer to Mozilla in light of continuing security issues and the problematic nature of XP Service Pack 2. Mozilla does have much to recommend to you, and I use it on my Linux system at work and at home. Let me tell you something about that little security padlock on Mozilla, and the neat information features it can provide for you.

A right click on the padlock in the right lower corner of the screen will open a new window with several tabs that provide information about the page open in your browser.

The Security Tab is where you will find the meat of this feature. I went to LLBean.com, and the login page for those with accounts. The padlock locked, and a right click opened the Page Info window and the Security Tab. Here's what it said:

"Web Site Identity Verified. The web site www.llbean.com supports authentication for the page you are viewing. Connection Encrypted: High-grade Encryption (RC4 128 bit). The page you are viewing was encrypted before being transmitted over the internet."

This is enough to tell me the page is encrypted and safe for me to enter my user name and password for my LL Bean account. That encryption grade, 128 bit, is the highest presently used in internet transactions. If you use online services for your banking, those transactions are encrypted at RC4 128 bit, as well.

Don't just take the closed padlock as an indication of security. Check it out further, as I did. Check out Mozilla as an Internet Explorer replacement, too. Then you can look at the Page Info feature I've just described. Be safe in your online activities. There are just too many people out there hoping to pick your pockets.