Shopping Cart System. To accept online payments you must have what's called a "shopping cart system" that allows your customer to choose and purchase products. Adding a shopping cart system to your website can be simple or complex, cheap or very expensive. It depends on product you're selling and options you wish to offer your customers. As in everything, you get what you pay for.

A shopping cart system typically consists of three components: a product catalog, shopping cart, and a checkout/payment system. The product catalog is your inventory component and displays items you have for sale on website. The checkout/payment system is part of program that allows your customers to "add this to my cart," and checkout/ payment system is component that allows customer to checkout and pay for their purchase.

There is a wide variety of shopping cart software on market and price is dependent on features you want. Shopping cart systems range from simple HTML form insertions to full- blown catalog and inventory systems like those used by Amazon or Dell.

You can spend from zero to tens of thousands of dollars. Some of them you can set up on your site yourself while others should be set up by someone who knows what they're doing.

You can get a free Paypal.com shopping cart system which is most simplistic in nature, but easiest to implement. Using Paypal also alleviates need for a bank merchant account because everything is handled by Paypal, for a fee of course. You insert HTML forms into your website code and when an item is purchased.

There are also numerous online companies who will assist in setup of your ecommerce / credit card system. These companies charge several hundred to several thousand dollars for their services, so it would be wise for you to have an idea of exactly what you need before calling them into play.

Customer submits credit card. The site sends transaction to gateway. The gateway sends info to processor. The processor contacts issuing bank of customers credit card. The issuing bank returns result of processor. The processor routs result to gate. The gateway passes result to website. The website displays result.

One thing to remember when setting up an ecommerce system on your site is this: online it's all about security and privacy. Though online credit card processing has been around for years there are still many people who are uncomfortable giving their credit card number online. These are same folks that do not hesitate to give their credit card number over phone to a complete stranger or hand their credit card to a waiter who disappears with it for ten minutes. Online credit card processing is much less susceptible to fraud and abuse than either telephone processing or giving it to a waiter.

Eighty-five percent of internet users surveys said that a lack of security made them uncomfortable sending credit card information over Web.

It's up to you to instill a sense of security and make customer comfortable shoving their card into their computer.

Here's to your success.

Tim Knox tim@dropshipwholesale.net For information on starting your own online or eBay business, visit http://www.dropshipwholesale.net

Small Business Q&A is written by veteran entrepreneur and syndicated columnist, Tim Knox. Tim serves as the president and CEO of three successful technology companies and is the founder of DropshipWholesale.net, an online organization dedicated to the success of online and eBay entrepreneurs.

Applying for a merchant account at a bank is much same as applying for a loan. The only difference is sometimes a loan is easier to get. There is prerequisite paperwork to complete and pledging of first born, followed by an approval process that can take up to several weeks. And you are not guaranteed that bank will approve your merchant account, even if you have been a favored customer for many years. Banks have strict regulations regarding granting of merchant accounts and if issuing you a merchant account in anyway puts bank at risk of losing money, you will be turned down. Banks always make decisions based on economics, not relationships (no matter what your banker tells you).

Requirements for qualifying for a merchant account varies among banks, but in general bank will look at following criteria:

How long have you been in business? Business longevity suggests a history of stability, efficient management, and good financial health.

What is your product or service? Does your product lend itself to a high rate of returns and chargebacks? A chargeback is a disputed credit card charge that is refunded to buyer and charged against your account. You are accessed a chargeback fee that can be as much as $20 per event. If your business lends itself to high chargebacks, you will not get merchant account.

How's your credit report? Banks always look at how much you owe and how you pay your bills, so it's important to have good financial and trade references. If you have a history of late payments or defaults to vendors, it will count against you.

What is your anticipated volume of sales and average transaction amount? The more money you make, more money bank makes. If you anticipate just a few credit card charges per week it may not be enough to justify merchant account in bank's eyes.

Is your business categorized as a "high risk merchant?" High risk merchants are those with highest instances of credit card fraud and chargebacks. High risk merchants include many types of internet-based businesses, telemarketers, travel and cruise businesses, and membership clubs. Being a high risk merchant dramatically decreases your chances of getting a merchant account with a bank.

Being a high risk merchant doesn't mean that you can't get a merchant account from somewhere else. Thanks to growth of ecommerce in recent years there are a number of alternative companies that will provide you with a merchant account, sometimes with more perks than a traditional account, but almost always with higher fees.

Also, not all banks support internet merchant accounts. If yours does not, shop around for one that does. We'll take a look at accepting credit cards online in next week's column.

Here's to your success.

Tim Knox tim@dropshipwholesale.net For information on starting your own online or eBay business, visit http://www.dropshipwholesale.net

Small Business Q&A is written by veteran entrepreneur and syndicated columnist, Tim Knox. Tim serves as the president and CEO of three successful technology companies and is the founder of DropshipWholesale.net, an online organization dedicated to the success of online and eBay entrepreneurs.