Internet Payment Options

There has been much talk about how Internet is becoming an important channel for buying and selling products and services. Companies are looking to exploit Internet in a variety of ways to increase sales to both existing customers and to customers in new markets.

To make these initiatives work in practice requires application of a range of technologies, from servers to software. An increasingly-critical piece of e-commerce equation is ability to pay for goods and services using Internet-based applications.

Internet-based payments offer benefit of convenience to customers who can pay for their products or services and receive immediate feedback on status of their payment. Well thought-out payment interfaces will address payment needs of bulk of your customers, and offer them valuable features such as electronic receipts, recurring billing options and more. For merchants, online payments can mean that bad debts are reduced and cash flow is improved, improving bottom line of your business.

The type of payment that you choose will be dependent on your customers’ needs and type of business that you operate.

E-Commerce Payment Types

Many types of payments can be used in online transactions (here we refer to those transactions that use Internet as communications channel). The major types include:

EFT: Electronic Funds Transfer (EFT) is a system of transferring money from one bank account directly to another without any paper money changing hands. It provides a means of transferring funds to and from customers and business partners. Electronic cheques: Different types of electronic cheque services are available, but all essentially provide a mechanism for paying over Internet by enabling purchasers to use their existing chequing accounts to transfer funds to another party. A secure infrastructure ensures that confidential information is not compromised in transit.

Debit cards: Wildly popular for “bricks and mortar” purchases, they have not caught on as a mechanism for Internet purchases because banks and payment processors have only certified a limited number of devices for transmitting PIN Number associated with a debit card over internet. Limited pilots are underway using wireless debit card devices for applications such as pizza deliveries and taxis.

Credit cards: Still dominant online payment type, it is popular because of its ubiquity and familiarity that customers have in using them in a variety of settings.

Internet banking: Some businesses (typically large ones such as telephone companies) enable customers to transfer funds from their bank account to pay bills. Online bill payments are usually facilitated by major banks where you can log on and pay your bills at your convenience.

Alternative payment types: A large number of niche payment types have arisen over past few years (typically with minimal or no success). These include stored value cards, Internet (digital) cash, pseudo-currencies (e.g. Flooz) and others. No doubt at some point one or more of these payment types will gain a foothold, but none have sufficient critical mass at this time to be a viable alternative for most merchants.

For purposes of rest of this article, we will focus on credit card payments, which represent a substantial amount (95%+) of payments being processed over Internet today.

Getting Started with Credit Card Processing

If you are a merchant that is looking to accept credit card payments, there are a few steps that you should follow to ensure a successful implementation. None of them are difficult, but some can take time to complete. It is recommended that you follow each of steps in sequence to avoid compatibility issues between your application and financial network.

Let’s examine each step in order:

1. Determine Right Payment Interface

The payment interface is application that you are going to use to process credit card payments. There are many options available to you, and right choice will be dictated by type of business you have and requirements of your customers. Some of more popular interface options include:

Shopping cart _______

Useful When …Your customers may be purchasing multiple items from you in a single purchase Make Sure That … You understand features that you need and that you purchase from a reputable vendor ________

A shopping cart enables merchants to accept payment for multiple items in a single transaction. Most online retailers that offer a variety of products use some type of shopping cart application. Shopping carts typically provide customers with a number of convenient features, such as an electronic “shopping basket” to “hold” their goods until purchase.

Shopping carts offer a wide range of possible advantages to merchants as well, such as automated shipping and tax calculation; “back-office” tools for payment and inventory management; reporting tools; coupons and discount functions and control over individual and store-wide sales.

Shopping cart software can be purchased and “hosted” by merchant on a server of their choice, but most merchants choose to use services of a shopping cart service provider. Costs typically include set-up fees and monthly fees, in addition to your payment gateway fees. Many shopping cart providers offer different levels of feature packages, with fees based on chosen feature level. Before you invest in a shopping cart application, understand what features are important to you and to your customers. Make sure that service provider is reputable and is going to be around for a while. Switching service providers can be expensive, time consuming and frustrating. Your research will pay off in long run.

“Buy Button” ___________

Useful When … You only have a few products to sell or your customers only purchase one product or service at a time Make Sure That … The customer buying experience is “seamless” and secure ___________

A “buy button” is similar to a shopping cart, but typically facilitates purchase of only one product (or service). It generally consists of simple html code that you insert into your site that displays an order form with associated product information. Customers click on buy button, and an order form appears with relevant order information in it. Customers enter their shipping and credit card information in form, press “submit”, and their order is processed.

Be aware that some buy button applications force customers to be “transported” to another page that has a different look and feel from your site. Some customers are uncomfortable with this, and may abandon sale if this happens. Again, shop around. Talk to your payment gateway provider. It will pay off.

Virtual Point of Sale (VPOS) ___________

Unless you are using an off-the-shelf shopping cart application, chances are that you or your developer will be customizing at least some element of your payment application to meet your specific needs. Your payment application may be simple or it may be complex; either way, following right sequence of events and taking advantage of available technology will help increase customer satisfaction; reduce development costs, payment-related errors and time to market; and provide you with a more functional application.

The following article highlights key steps involved in designing, building and launching payment applications. While it is written from a developer’s perspective, it will equip merchant with information that you can use to when you are interacting with your developer throughout process. It is part of a series of articles offered by EasyPay123 to help merchants understand many facets of processing credit card payments.

Step 1: Understand User Needs

Understanding user needs is a necessary starting point for development of any payment application. Documenting how user will interact with application and all of its various features ensures that all parties can agree on what final product will look like and how it will operate. Some of questions that must be answered at this stage include:

* How will payments be accepted (online, phone-in, IVR, etc.)? * What customer data is to be captured (e.g. name, phone #, address info, etc.)? * What supplemental data will be captured (e.g. demographics, questionnaire, etc.)? * Which data fields should be made “required” on interface? * What error detection/correction or data validation scripts will be used (e.g. MOD10 credit card number validation, date/dollar format, etc.)? * Do any calculations need to be made on interface? * What will look and feel of interface be (graphics, text, colors and layout)? * Will access to application be restricted by IP address or username/password? * Will results of transactions update a database in real-time or be made accessible to a third party application/data-base at some point after transactions take place? * How will credit card data be input (keyed, swiped, touch screen, etc.)? * What content should be put on response/receipt page? * How will customer/merchant receive an email receipt (if desired)? * What will contents of emailed receipt be? * What bank(s) will be used for merchant accounts? * Where will application be hosted? * How will payment form be secured?

The answers to these questions should be captured in a specification document so that merchant can review and comment. This step will reduce development time and cost, and also increase merchant satisfaction with project.

Step 2: Design Interface

Designing user interface is always “part art/part technology” and will vary greatly depending upon application. It should be driven primarily from user needs defined above. In addition, technical considerations, such as target operating system, hosting environment and development language must be taken into account. These decisions are “meat and potatoes” of most developers’ business, so little discussion is necessary here. An interface mock-up is useful so that users can provide input and test out application (some payment gateways provide developer environments so that a transaction can be accurately simulated with application prior to “going live”).

You may want to include any number of scripts in interface to reduce errors and improve its functionality. Some that you may find useful include:

(a) MOD10 Check: Uses Luhn algorithm to determine whether credit card number is valid or not. Reduces transaction time. Could reduce merchant cost if gateway charges for failed credit card numbers. (b) Order Number Generator: Generates a unique numeric order number that can be posted with each transaction. With “reject duplicate order number” option turned on (if supported), it nearly eliminates risk of duplicate transactions being processed by gateway. (c) Required Fields: Disables ability to submit a transaction unless all required fields are completed on order form. Ensures all necessary / desired data is posted to payment gateway. (d) Double Submit Prevention: Disables ability for user to click “Submit” button again while a transaction is still processing. Reduces risk of an erroneous double submission of an order. (e) Email Validation: Ensures that an email address is in format XXXXX@YYYY.ZZZ. Reduces risk of incorrect emails being entered. (f) Complete If Left Empty: Automatically populated a specific data field if user chooses to leave it empty (e.g. inserting “not specified” into address field).Ensures that fields that are required by gateway are populated with an acceptable value. (g) Alpha / Alpha- Numeric / Numeric Only: Issues an error message if user enters wrong data format. Reduces risk of data entry errors. (h) All Caps / Lower Case: Issues an error message if user enters wrong data format. Reduces risk of data entry errors.

Step 3: Integrate to Payment Gateway

Integrating payment gateway to an application (such as a website or billing system) can vary greatly in terms of complexity involved. In general, following steps will apply: 1. Integration Method Selection

Most payment gateways have many integration methods depending on type of interface sending transaction, where that interface is hosted (i.e. operating system) and how complex integration is. For example, some implementations may use a simple form post to payment gateway, whereas more complex ones may require use of an API.

Mapping out data flows and system requirements for application against payment gateway integration methods will help determine appropriate method. Generally speaking, use of an API provided by gateway provides most flexibility, but can be more complicated to integrate and maintain.

2. Data Field Posting Configuration

In this step, you should ensure that you are passing all of required and optional fields from interface to gateway using correct syntax. Required fields are minimum ones necessary to complete transaction. Optional fields contain useful supplementary data. They must be posted to gateway using syntax dictated by your gateway provider.

3. Response File Interpretation