If you're just starting out in e-commerce, chances are you'll want to be able to accept credit cards online. Although there are alternative online payment options available (such as electronic checks, money orders, and PayPal), credit cards remain the most popular way to purchase goods and services over the Internet. As a merchant, you will have to take a few preliminary steps in order to accept and process credit card payments through your online store.

Before your online store can start accepting credit cards, you will need to open a merchant account. A merchant account is a bank account for your business, through which you must process all business-related transactions. You can open a merchant account at nearly any bank, once your application is approved. Before a bank can approve you for a merchant account, they must thoroughly research your credit and business history. The bank must also verify your identity and contact information, which can be made available to the public on demand.

The bank will then verify your physical base of operations. Even though your business may exist solely as an online store, with no physical counterpart, a bank will not allow you to open a merchant account unless they can validate your place of residence. The anonymity of the Internet can inspire fraudulent sites that vanish after scamming a few customers. Requiring location and identity verification might dissuade potential scammers, as it severely limits their ability to disappear without a trace.

How To Securely Accept Credit Cards Online

Once your merchant account is approved, your next step is to ensure the security of transactions conducted on your site. Many web surfers are already hesitant to provide their credit card information online, so you must make sure that both you and your customers are protected from online credit card fraud. Potential customers should feel confident that they can shop on your site without risking having their credit card accounts hijacked, or their identities stolen by hackers who intercept their sensitive data. They should be also be confident enough in the site's integrity to trust that the merchant will not misuse their personal and credit card information. Digital certificates can provide this security for both customer and merchant, as they are the primary features of a secure e-commerce site.

Digital certificates are small files, licensed to a website by a third party organization, known as a "certificate authority." New internet merchants must apply for a digital certificate before they can accept any credit card payments through their site. This process is similar to that of opening a merchant account, as the certificate authority must also verify your identity, contact information, and business history before issuing a certificate. Once all of this information has been verified, it is included on the digital certificate The unique digital certificate is then stored on your server, providing a record of the site's ownership and history to anyone who conducts business on the site. Before a customer enters any credit card or identity information into their browser while shopping on a secured site, they will be alerted that they are about to conduct a secure transaction. This reassures the customer that their computer will be communicating directly with the site's server, and any data transferred will be safe from unwanted parties. A secure transaction also indicates that the site's integrity has been confirmed by the third party certificate authority, otherwise the server would not be equipped to conduct the transaction.

When a secure transaction is initiated, the digital certificate creates two small "key" files. One is transmitted to the customer's browser, and the other one remains on the server. Once the digital key is installed on the customer's browser, it can encrypt all of their information into an impenetrable string of random characters. The data remains encrypted as it is transmitted across the Internet, keeping it safe from cyber criminals. Once the data is safely received by the server, the other key file decrypts it, allowing the store to safely accept credit card's online.

Building an E-Commerce Site

After the data is accepted by the server, it is run through a virtual terminal in order to validate the credit card and authorize payment. In brick-and-mortar establishments, credit card terminals are small devices equipped with a magnetic strip reader that a credit card can be swiped through. Virtual terminals exist only as software capable of providing a direct connection between the merchant and the card provider. The virtual terminal transmits the card information to the credit card provider, where it is checked against the provider's customer database. If the card is approved, the online store can instantly authorize payment.

Digital certificates, virtual terminals, and other products required in order to accept credit cards though your online store are available through e-commerce solutions providers. These are organizations that can help an online business implement and integrate everything necessary to conduct secure online transactions. There might even be a solutions provider available through the bank where you opened your merchant account. Solutions providers can also help you create your actual website. Many solutions providers offer a wide assortment of basic site templates. Templates are pre-made generic websites that you can easily customize with text and images in order to create your own online store. If you're more ambitious, some solutions providers also offer web design services, which can help you launch a unique online storefront.

Once your site is built, and your account is configured to accept online credit card payments, you still need a way for customers to provide you with their card information. Virtual shopping cart software can be purchased on its own, or as part of a package from a solutions provider. This software provides customers with an interface from which they can review the products they intend to purchase, calculate costs, and provide their payment information to the site. Some of these programs have additional features, and can analyze the customer's shopping habits and purchases in order to suggest other items, related items, or possible substitutions for out-of-stock items.