Should my business take payments online?

Nowadays, more and more people are skipping the shopping malls and opting to shop online instead. Online sales jumped over 20% from last year alone, and this wasn't just in the consumer industry either - more businesses are opting to purchase products and services online rather than wait in long phone queues and then recite information repeatedly to the operator.

Knowing this, if you're not already accepting payments online for your products and services, you may want to start.

Advantages of accepting payments online
There are a number of advantages to accepting payments online, including:

• Convenience. Accepting payments online is more convenient for all involved, customers and businesses alike. Funds are automatically verified and then transferred into your accounts, and customers will appreciate the ease and speed of being able to enter information online instead of over the phone.


• Increased sales. Many companies experience surges in their sales when they open an online store or have an online payment option.


• Increased productivity. Businesses will experience increased productivity, as their workers will spend less time filling orders and more time on other business. This is especially advantageous for smaller start-up businesses who may have limited resources.

How does it work?
In order to accept payments online by credit card or services such as PayPal, you first have to have an Internet merchant account with an acquiring institution. When payments are made to you online, the institution then authorizes the purchases made with the credit card to make sure they are legitimate. From there, they see to it that the funds are deposited into your merchant bank account.

In order to get a merchant account, you need to have a checking account with a US bank; it's a good idea to set one up with your business's name.

There are a number of ways you can set up online payments. You can have an online store that includes such features as a shopping cart, when more than one product is offered, and accepts payments via the secured site. You can also choose which credit cards you want to accept and whether you will accept payments from services like PayPal.

Costs
The fees associated with accepting payments online vary. If you already have a business website, you need only add a page or two for your online "store," which will most likely already be covered by the web host you get your page from. If you don't already have a website for your business, you will have to get a domain name, a site, and a hosting service as well as design the site. This can be done inexpensively, but it can also be hundreds of dollars upfront.

With regards to accepting payments, in most cases the fees are nominal. Many online payment services will waive their set-up fee. Set-up fees range from anywhere between free and $300, the average being about $100. The month-to-month charge is usually free, but some companies charge up to $20 a month.

In addition to the monthly and set-up fees (which, as a reminder, are usually free if you do your homework and shop around), all providers will charge a fee per transaction done on your site. This ranges between $.10 and .30 per transaction. If you want, you can cover your costs by raising the price of your merchandise 10-30 cents. This generally works best for stores and businesses that are just starting out.

Overall, it is advantageous for businesses to accept payments online. The costs are minimal and the benefits far-reaching.

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Categories: Managing Money,

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