How To Accept Credit & Debit Card Payments on Your Website
Credit card payments are the second most common way that customers pay for online purchases, and by learning how to accept credit card payments on your website, you’ll be able to accept purchases or donations from anywhere in the world. The options available to you depend on the kind of website you have, whether you have a registered business and how much you process in sales each month. With this information in hand, you can compare your options and start accepting credit card payments soon.
The Steps Required for Accepting Credit Card Payments
Just about any business can establish a credit card payment system. You just have to do the following.
Step 1: Make Sure Your Website Is Compatible with E-Commerce
When it comes to accepting payments online, not all websites are equal. Some sites—like many ready-to-go blogging platforms—don’t come equipped to handle payments, limiting your options to widgets that you paste into your web code and that then take your customers off your website to pay.
If you’re serious about selling online, you’ll generally need to create your website with a site builder like WordPress or Wix that has a ready-made shopping cart add-on. Alternatively, you can open an account with a shopping cart solution like Shopify or BigCommerce.
Step 2: Choose a Payment Processor
Next, you’ll need to choose a payment processor to handle the credit card transactions on your behalf. Payment processors provide:
- A merchant account where the funds from card payments will land until they’re cleared
- A payment gateway that encrypts your customers’ card data before sending it through the payment networks for authorisation
There are two main kinds of payment processors: dedicated merchant account providers and merchant aggregators. A third type—payment gateways without a merchant account—can also be used but you would need to apply for a merchant account separately.
Dedicated Merchant Account
A dedicated merchant account is the best way to accept payments online if you are a registered business with a processing volume of €5,000 or more per month. To be given your own account, you’ll need to supply certain merchant account documentation and go through an underwriting process. You may also need to sign a contract specifying the terms and rates that you have agreed on with the payment processor.
Upon approval, you’ll get:
- A secure global payment gateway
- Your own merchant account and merchant identification number (MIN)
- Customised per-transaction fees based on your business type and processing volume
- A wide range of merchant services, including fraud and chargeback prevention tools, sales reports and analytics, merchant statements and special features such as recurring billing
In addition to transaction fees (which tend to be more expensive for credit rather than debit cards), dedicated merchant account providers may charge setup fees, monthly fees and early termination fees if you decide to change providers before your contract expires. It’s important to ask for a full list of fees before signing the contract so that you don’t encounter any surprises along the way.
Merchant Aggregators
Merchant aggregators, also called payment service providers (PSPs), allow very small businesses and non-business website owners to accept credit cards without applying for their own merchant account.
Rather than assign individual merchant accounts to each of their members, aggregate payment processors act as the merchants and process all of their members’ online credit card payments through the company’s shared merchant account.
To cover the higher risk of processing credit card payments without an initial underwriting process, aggregate payment processors charge higher transaction fees and may freeze your account if they notice any unusual activity (such as a sudden increase in sales).
With payment service providers, credit card payments are also typically processed off your website, although some PSPs provide integrated, customisable checkouts for an additional monthly fee.
Step 3: Apply for an Account
Whichever kind of payment processor you choose, you’ll need to register or apply for an account before you can start accepting credit card payments on your website.
If you go with a payment service provider, you’ll open an account with your basic information and link your cards and bank accounts. You will usually also be asked to provide identity documents to remove any initial limitations on your account.
To open a dedicated merchant account, you generally need several kinds of documents, including:
- A photo ID
- Your business number
- Your certificate of incorporation
- Your tax ID number
- Your VAT number (in Europe)
- Your EORI number (for businesses that conduct imports and exports from Europe)
- Your bank account number
- Bank statements
- Financial statements
- Others if requested by the payment processor
After submitting your documentation, the payment processor will review your documentation and ask you for additional information if needed. Then, once your business is approved, you will be given your MIN and account login details.
Step 4: Integrate Your Payment Gateway
If your website is designed for e-commerce, integrating a payment gateway will be fairly straightforward. Usually, all you’ll need to do to accept online payments is to add the payment processor’s plugin or an API module that’s designed for your shopping cart solution.
Once the plugin or module is installed, run a few mock transactions (if available) or a real transaction (you’ll pay transaction fees on this) to check that everything is running smoothly. Your payment processor should provide technical support to fix any issues before you take your gateway live.
Step 5: Start Accepting Payments
After checking that your checkout process works smoothly, add your payment icons (Visa, MasterCard, Discover, American Express and others) to the footer and let your customers know that they can now make credit card payments on your website.
If you accept alternative payment methods like PayPal, mobile wallets, peer-to-peer payments (such as Venmo) or bank transfers, add this information to your payment page as well.
What Happens When Someone Makes a Debit or Credit Card Payment?
When a customer completes the checkout process, their credit card information will be scrambled (“hashed”) and routed through the credit card payment networks until an “approved” or “declined” message is returned from the customer’s card-issuing bank. The entire credit card transaction process only takes a few seconds, although you won’t see the money straight away.
To receive your payments, you’ll need to wait until the day’s batch has been authenticated (in some cases, you’ll do this yourself). Then, your payment processor will request the money from the issuing banks and deposit the money in your merchant account. After one or two days, the funds—minus fees—will be deposited either into your account balance (for an aggregator account) or your business bank account (for dedicated merchant accounts).
Differences between Credit and Debit Card Transactions
For debit card transactions, the money is pulled from the customer’s bank account straight away and you’ll see it in your bank account faster. This is because debit cards can only be used to spend the money that the customer actually has in their account.
In contrast, as credit card payments draw on the bank’s funds, they usually take longer to go through and come with higher fees. It’s important to keep in mind, though, that customers who pay with a credit card tend to spend more, which offsets the higher transaction fee.
Add a Payment Gateway to Your Website and Start Getting Paid
Whether you want to process payments for a hobby business or an e-commerce store, it’s easy to accept credit card payments on your website.
First, shop around for the best deal for your business type and transaction volume. Then, gather your documents and open an account. Finally, integrate the payment gateway on your website and run a few tests before going live.
Soon, you’ll be getting paid into your stored balance or bank account from customers around the world.
