Credit Cards

Are you likely to get more orders if you accept credit cards? In the trade, if you have this facility, you are called a merchant by the credit card companies, who are called merchant service providers. However, becoming a merchant is not as easy as the abundance of outlets that take plastic would lead you to believe. Since the arrival of the Internet they have tightened up their criteria for acceptance, either wanting to see a couple of years' audited accounts or be provided with a refundable deposit. If you're a startup venture you won't have audited accounts for at least 12 months. Furthermore, merchant service providers have been known to ask for deposits up to $50,000 to cover them against abuse (with electronic payments machines you can generate refunds as well as take money), depending on the perceived risk of your business.

Every major country has several merchant service providers, so it makes sense to shop around for the best rates. There are also different types, notably Visa, American Express, Diners Club, and MasterCard. They are not interchangeable, so if you have a Visa arrangement you still need to approach American Express to take money with their cards. Pay careful attention to their validation and anti-fraud procedures. It is important they spell out the correct procedures for when cards bounce and how you can best protect yourself. Contrary to what they will tell you at the outset, if you are doing a serious level of business the rates are negotiable.

Having credit card facilities in-house has the following advantages:

♦ Professionalism—it's your name that appears on the transaction

♦ Promptness—you get paid immediately (often the next working day)

The disadvantages are that you need to administer the process yourself. To manually process a credit card order and generate an invoice takes up to 5 minutes, irrespective of the order being for 100 items or one.

Ideally you want to integrate and automate the online payment procedure. When the order is placed it is verified, the payment authorized, the request to the dispatch department made, and your accounts system updated simultaneously.

Remember to route all online transaction Web pages through to a secure server. With credit cards, money should only be taken from clients when the goods are ready for dispatch.

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