Q: How do I process credit card payment on my site and in my business?

A: Processing Credit Cards with an on-line card processing company as opposed to a 'terminal based' card processor is a highly competitive industry. Many companies are clamoring to gain market share that is dominated on-line by the PayPal giant.

Our own Cartamonga on-line shopping cart system and T R I P on-line reservation and scheduling system are capable of being tied into many different card processing companies. Over the years we have made connections, but none have worked as smoothly and reliably as the PayPal system for on-line sales. In my own opinion, the reason they have become so big is because they DO IT RIGHT!

Now, the challenge comes in when you want to get a company that can to terminal and on-line card processing. Why is this such a challenge? There are a lot of banking institutions out there that do not seem to have the background in processing on-line payments AND terminal services. The history of most banks is they offer the terminal service, the on-line processing is new and from my 'technical' standpoint, they do not have the knowledge needed to create a system that will connect to online shopping cart systems.

Why is PayPal so different in this area? Well, PayPal has been doing this for over a decade! No other company has the history in creating an on-line card processing system that PayPal has. Face it, they are really good at it because they have been doing it for a very long time!

As an illustration, go to nearly any small chain bank and ask them how to process credit cards on your web site. IF they even know, see how long it takes to get that information together. If it is anything over 90 seconds (likely it will take a week or more) they are not ready for this market. At PayPal, it takes me about 90 seconds to get the information. It really is not very difficult, any decent web developer can look at a 20 to 30 line sample and create the programming required to create the connection in less than half an hour. I have done it a number of times with PayPal so I can complete the connection now in under 5 minutes. THAT is PayPal.

When we hook into another company, finding that coding takes time. It takes at least an hour to do the same operation for a new card processor, sometimes hours if the support department has no idea how to do it (this is normal). They get the question, send it to their IT department, wait for an answer then get it back to you. I find it frustrating. For me, going on-line, finding the code and getting it done is far better. In all honesty, in the nearly ten years I have dealt with PayPal, I think I have only called them once.

Well, it boils down to this... getting one company to do it all. I use PayPal for all of it. But of course, I am always on-line. That makes my situation a little unique.

Many people want to process credit cards at a show booth or various places. The best solution I have heard is to just go to your bank and get a traditional terminal service for off-line stuff. About half our customers use this for on-line stuff, too.

You can go to a show, get a phone line put in the booth and use the terminal there for immediate responses. You can also leave the terminal at the office and process them by hand when you return after the show. When I did shows, a phone line in the booth could get expensive. Punching in 20 to 100 sales back at the office after the show was really not that bad. Once I got good at it, I spent no more than 45 seconds per sale proving to be a quick paperwork task as any business could have.

As for price, I have not seen anyone that can beat PayPals prices. Be careful in this. PayPal offers a lot of fancy services not needed by small companies. This can get costly. Also, when competition makes those 'rate comparison charts' that include PayPal, they ALWAYS include those most expensive services. For my small business, we pay 2-3% per sale plus $ 0.30 per sale in expenses. Monthly fees? Never done it.

The question you really have to ask yourself is 'How many sales am I making?' The problem is most people ask 'How many sales would I like to make?' This is irrelevant. If you are making 2 sales a week on credit card, punching that in a terminal is no big deal. Taking a couple minutes to punch in a $300 sale is REALLY cheap.

If you start processing more than 100 sales a week on credit card, that would be the time to consider a new card processing system.

I consider myself a small business consultant of sorts. I have run and helped run, started and help start a lot of small businesses. Some are still small as mine is. That is my choice. Some have grown to larger companies dealling in six and seven digit gross incomes. It is so easy to get all excited about how big your business could be. Getting caught up in this is almost invariably EXPENSIVE. Early expenses will run you bankrupt, QUICKLY.

A very wealthy associate and former partner had these wise words: There are two ways to grow a business, make more income or reduce expenses. Just getting a more expensive service does not make more money. Wiegh your options carefully.

Where?

• Welcome - PayPal