If your store is doing really well and getting orders day and night, there’s no way that you’re going to able to stay awake perpetually to process orders even if you’re an insomniac. Thankfully, there is a solution that enables payment to be processed 24/7 while allowing e-store owners around the world to get a good night’s rest. Needless to say, our solution has this good free shopping cart software feature.
Enter Payment Gateways. A payment gateway is like a point-of-sale terminal at conventional retail outlets. It processes credit card orders and authorizes payments in real-time while keeping all transaction information safe and secure. Payment gateway integration is one of the first shopping cart features merchants usually look for and, as mentioned before, this good free shopping cart software feature is available (for major gateways) at InstanteStore. There are actually two main types of payment gateway, as we’ve mentioned in a previous article. In this article we will go a bit deeper and explore the differences between the two, and how particular aspects of each might affect merchants.
There are basically 2 types of payment gateways: one that requires a merchant account and one that doesn’t.
First, let’s take a look at payment gateways that require a merchant account. To utilize the services of this type of gateway, a merchant must first open a merchant account via merchant service providers (MSPs) such as bank or independent service organizations (ISOs). This could take a few days to a few weeks as MSPs and ISOs need to assess the risk of granting a merchant account to an applicant. Naturally there are also costs involved in setting up such an account. However, you save by enjoying better rates (commission per transaction) at payment gateways that require merchant accounts.
In terms of billing, the merchant’s on-site or company name (subject to length limitations) will be displayed on customers’ credit card bills. This is something that can potentially drastically reduce the occurrence of customer charge disputes (since customers will be more likely to recognize the name of your store when looking at their bills versus some possibly cryptic payment gateway letters and numbers). Less disputes means less hassle, and potentially less expensive chargebacks.
Next, let’s look at payment gateways that do not require merchant accounts. Since these gateways do not require merchant accounts, merchants need not go through the hassle of applying for merchant accounts and having to be subjected to credit rating evaluations. A major drawback of this is that merchants will have to pay high commission rates (6-15%) for every item sold plus a fixed amount per transaction.
Merchants also run the risk of chargebacks due to credit card disputes because their store names do not appear on credit card bills. Of course, you can remedy this situation by informing customers beforehand of what to expect. A simple note during the checkout process may save you a lot of hassle and money later on.
Drawbacks aside, both types of payment gateway offer customers the convenience of paying online with ease and security at any time of the day. This convenience also means that stores can do business around the clock and accept orders from practically anywhere in the world. Even with all the costs involved, successfully leveraging on the global market will most likely result in a very cost-effective way to run a store. So it would be a good idea to try to work different payment gateway costs into your business start up cost list and make full use of this free shopping cart software feature integration where available.
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