There are two ways you can add e-commerce capabilities to your website:

1. Having your own merchant account 2. Using third party processors

What is a merchant account?

A merchant account is a special kind of bank account where funds received from credit card transactions are first routed to special account and held there before being remitted to your business account. You as an online merchant will need an account called “Card Not Present Merchant Account”. Having merchant account is, actually, first step in processing credit cards online. You will also need a payment gateway. A payment gateway is a service provided by billing processor which allows real time authorization of online transactions. The payment gateway you choose to work with has to be compatible with your shopping cart. Three top payment Gateway providers are AuthorizeNet (http://www.authorizenet.com/), Verisign (http://www.verisign.com/) and USAePay (http://www.usaepay.com/). All payment gateway providers have their own merchant solutions. Most banks, today, work with partner payment gateway providers and are fully capable of furnishing with a merchant solution.

If you are just starting an online business and you don’t think that your sales will generate more than a thousand dollars a month, you will be better of with a third party processor. However, once your sales become a few thousand you will save a bundle by switching to a merchant account.

PayPal

With 72 million accounts worldwide and payment volume which is growing at a rate of 44 percent each year, PayPal by far is most popular third party processor on Internet.

PayPal is a simple and affordable payment solution for those online merchants who are unable to or don’t want to go through complex process of setting up a bank merchant account.

At present, PayPal has four unique solutions for merchants.

PayPal Website Payments Standard: This solution allows you to accept credit cards on your website. However, transaction is processed on PayPal secure server. The customer can choose to pay either by credit card or PayPal. If you don’t have shopping cart as yet, you may get one from PayPal; or you can integrate PayPal solution to your existing shopping cart.

Cost: No monthly fee. No setup fees. No cancellation fees. Transaction Fees are 1.9% to 2.9% + $0.30 US$.

PayPal Website Payments Pro: This solution is virtually same as having your own merchant account. If a customer pays by a credit card, PayPal works as a payment gateway for you. The customer does not leave your website at anytime if she pays you by a credit card.

Cost: $20.00 US$ monthly fee. No setup fees. No cancellation fees. Transaction Fees are 2.2% to 2.9% + $0.30 US$.

Buyers Don’t Rely on Yellow Pages Like Used to

Customers’ buying behavior has changed - for good. If your business depends on most categories in Yellow Pages to attract new customers, you’ve probably seen a decline. Traditionally, people headed to Yellow Page directory precisely when they were ready to buy. They’d check listings to find their options, or "let their finders do walking." Now they’ve got more choices.

New research by The Kelsey Group in March, 2005 found that 70% of US households now use Internet as an information source when shopping locally for products and services. These buyers aren’t going to Internet for online purchases, nor to find distant providers. They intend to spend their money in their own community.

The Kelsey Group also found that interviewed individuals felt search engines were a "better source of purchasing information than Yellow Pages, newspapers and magazines." The trend is being driven entirely by Internet users. Related data from other sources show that consumers who search online for purchases spend more than those using printed directory.

Demote Yellow Page Ad to a Smaller Portion of Your Budget

The Yellow Page industry is a Fifteen Billion Dollar industry in US. While there are more choices of printed Yellow Page directories than ever, buying habits of public have moved away from using them. Computer-savvy buyers know easiest way to find information they want is through search engines (and since May they can do searches on run, on their cell phones). But many small or local businesses aren’t even listed.

The Kelsey Group’s data is consistent with other statistics showing that Internet has overtaken newspaper for cars and real estate (major purchases). And it’s becoming "go-to" place for information. A study by imedia Connection found it’s "second only to spouses for finding referrals."