Select A Credit Card Payment Processor – Create A Profitable Online Store Part 4

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This is part 4 of a 5 part series on how to create a profitable online store. Your online store is worthless unless you can accept payments from your end customers.

There are many different ways to accept payment. For example, you can accept payments through Paypal, or even check/money orders. But despite the many payment choices available, the most important one is the ability to accept credit cards online.

Looking at the payment statistics for our online wedding linens store, 97% of our customers use a credit card to checkout and the other 2.9% use Paypal.

Less than .1% use check or money order. For an online store, paying by credit card is an absolute requirement. In this article, we will discuss the different options on how to process credit cards online.

Processing Credit Cards

Virtual Terminal
First off, there are 3 main ways to take credit cards online. The first way to accept payments is to sign up for what is called a virtual terminal.

Basically how this works is that when orders come in via phone or web, you then manually enter in the credit card information on a secure terminal.

However, since the focus of this series is on building a fully automated online store, this is not a viable option in the long run.

Process Credit Cards On A Third Party Website
The second solution is to have a link from your online store during checkout that takes the customer away from your site to the website of your payment vendor.

The customer then enters in their credit card number on your vendor’s website where the payment is processed. Once the transaction is complete, the customer is then redirected back to your online store. The standard Paypal account for example allows you do this for free.

The main disadvantage of this free solution is that processing credit cards is roundabout and confuses customers. Why should a customer be taken away from your website to another site that looks different only to be redirected back once again when the payment is made?

While processing credit cards this way offers the easiest setup, it can have severe consequences on your conversion rate. For example, the conversion rate for our online store was almost 50% less when we accepted credit cards in this fashion through Paypal Standard.

In fact, accepting credit cards this way was probably one of the main reasons business was extremely slow when we first opened our online store.

Process Credit Cards Directly On Your Store
The best way to process credit cards is to have a merchant account with a gateway and process credit cards directly from your online store.

It might be more of a hassle to setup and it might cost you a bit more upfront, but trust me, it’s worth it. The ability to process credit cards without a customer having to physically leave your website will not only lend credibility to your store but it will increase conversions as well.

Merchant Accounts And Gateways

The downside is that the choice of where to open your merchant account and gateway can be overwhelming. For example, here are the payment modules that oscMax supports right out of the box for US shops.

To make things worse, there are many different dealers/distributors of some of these services that all have different price points.

How Do You Decide?

Deciding on a credit card merchant and gateway account can be quite intimidating at first due to the terminology and different price points.

I’ve written up a good guide on how to select a credit card merchant and gateway already that you should definitely read if you are shopping around.

In the meantime, I can save you some time by telling you what I’ve used in the past.

For our online store, we’ve used both as well as Paypal Website Payments Pro and can wholeheartedly recommend both services.

If you would like to know more about some of the other services mentioned above, feel free to check them out. But I found and Paypal to be the easiest and cheapest services to use especially when we were just starting out.

authorizenetThe great part about is that it’s supported by almost every single shopping cart out there. The confusing part about using it is that there are hundreds of resellers offering different rates.

Some of these resellers have pretty sketchy websites as well. Since rates and fees change all of the time, you should take some time and shop around for the best rates.

The reseller I signed up for was eMerchant and they are extremely competitive in terms of rates.

Once again for more information on shopping for merchant accounts and gateways, please refer to my article on how to select a credit card merchant and gateway.

Paypal Website Payments Pro

paypal_logoPaypal Website Payments Pro offers an extremely competitive merchant account and gateway solution as well.

What I like about Paypal Website Payments Pro is that you can ship your products via UPS and USPS all from the same interface. Because it is so easy to ship products and accept payments through a single website, our online store uses Paypal Website Payments Pro today.

It’s not the cheapest merchant/gateway solution out there, but the convenience is worth it.

A Full Video Tutorial On How To Install SSL And Accept Credit Cards With Open Cart

The following step by step video tutorial will show you how to make your website secure with SSL and will also teach you how to install credit card processing on your online store.

Click here to learn how to accept credit cards and secure your online store with SSL without any technical experience required.

A Note About PCI Compliance

I just wanted to touch on the topic of PCI compliance because it has been a hot topic amongst would be shop owners. Because of all the credit card fraud stories you’ve read about in the papers, the PCI standards group has issued a set of guidelines that must be followed in order to process credit cards on your website.

The requirement of PCI compliance only applies if you either store, process or transmit credit card data. Therefore when using services like or Paypal Website Payments Pro, you are transmitting credit card information to the gateway so you must be PCI compliant or risk getting fined.

The issue of being PCI compliant has deterred many would be shop owners from selling items online because they don’t want to go through the hassle of becoming PCI compliant. Becoming PCI compliant isn’t that big of a deal. To make sure you are PCI compliant, you need to make sure of the following.

  • Make sure you don’t store credit card numbers on your server or database
  • Make sure you don’t use a laptop on a wireless LAN when using a virtual terminal
  • Make sure you are up to date on anti-virus and firewall software on your computer
  • Make sure your server is PCI compliant by getting it scanned for free. You can get your site scanned for free on the Hacker Guardian website
  • Make sure you use SSL encryption to transmit credit card data
  • Fill out a questionnaire in regards to your credit card and security practices

There is also this misconception that shared servers can not be PCI compliant. This is completely false. Hosts like Host Gator and Blue Host are PCI compliant and run hundreds of stores on their servers.

Disclaimer: Please note that I’m not an expert on PCI compliance. The above checklist may not be a comprehensive list and you should check the PCI Standards website for more information.

Next Up…Part 5: Get A Great Design

Ready To Get Serious About Starting An Online Business?

If you are really considering starting your own online business, then you have to check out my free mini course on How To Create A Niche Online Store In 5 Easy Steps.

In this 6 day mini course, I reveal the steps that my wife and I took to earn 100 thousand dollars in the span of just a year. Best of all, it's free and you'll receive weekly ecommerce tips and strategies!

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20 thoughts on “Select A Credit Card Payment Processor – Create A Profitable Online Store Part 4”

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  3. W^L+ says:

    The one thing I’d point out as someone who shops online is that I will not purchase from any online store that does not accept either PayPal or Checkout. No matter what a site says about their data storage practices, you don’t know whether they store your financial data or how secure the stored data is, so I actually *want* to be sent to a site I trust for the payment transaction.

    The truth is, *any* information that a site collects may be exposed if their server is penetrated. The less you collect (and store), the less you can lose.

    1. Steve says:

      That’s a good point. If you want to be absolutely careful, you should have your payment processed by a trusted third party like Paypal. The safest way for a store to handle credit cards is to store as little information as possible. However, I don’t believe that you represent the average online shopper. At least for our customer base, many people have never even heard of paypal, but it could just be our target market.

  4. chi says:

    One of the biggest concerns as a credit card processor is fraud on the the buyers side. Chargebacks can be a painful cost to business that people overlook when choosing a credit card processor.

    1. Steve says:

      We’ve processed thousands of orders and have never had a single chargeback. It probably depends on your target market and who your customers are, but it hasn’t been an issue for us.

  5. Mike King says:

    Loved this one. Great tips on handling the payment side. You’ve covered the topic well and I appreciate all the links and recommendations. I’ll have to check out if they support accounts in Canada or if they are only for US citizens. I use paypal already but not the pro system and would like to get a “real” merchant account so will look into those you listed. Thanks again.

    1. Steve says:

      Glad you found it useful. I’m not sure about the payment processors in Canada though I’m fairly certain both and Paypal offer merchant account/gateways there too as well.

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    1. Deborah Willard says:

      Be alert to merchant services companies whose main purpose in life is to take advantage of small businesses through high fees and outrageous contractual terms. The District Attorney’s office in Ventura County, California, filed a civil law enforcement action against Ladco Leasing and its parent company Elavon, and the judgment went against Ladco and Elavon. Here is a link to the press release from the Ventura County DA’s office:

      Do a search of the merchant services provider you are considering to find out how many complaints have been filed against the company through various on-line consumer complaints sites. IPayment is getting complaints similar to those logged against Elavon and Ladco Leasing.
      Look out for Entrust as well.

  12. Martin Eshleman says:

    Good information. However, I have been looking for a payment processor for Forex trading related products. Companies like Paypal, Google and others consider financial related products as high risk. Any help would be appreciated. Thank you.

  13. debt big says:

    Great information on this site. I love reading your posts. Thanks a lot!

  14. Limert says:

    Great article. I guess for forex related product, we can only use authorize payment method right? We have emailed a few other services such as 2co, but they consider forex products out of their scope. Anyway, thanks for sharing this useful information!

  15. High Risk Payment Processors says:

    Indeed a nice post and I really like reading High Risk and Off Shore Merchant Accounts, Payment Gateway Services related stuff on the web. You have beautifully explained the importance and updated news on the Payment Gateway Services. Keep up the nice posting as I have subscribed to your blog.

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