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Process for opening an e-commerce site

Posted on 2004-10-04
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Last Modified: 2013-11-29
Hello All,

I've been working on an ecommerce website and am nearly finished with it. In the country where I work in (third world) they didn't allow me to open an online merchant account because I am with a private company.

I would like some input on doing this with a US based ecommerce service.

My site is developed with MySQL and PHP, and all I require is a payment page that I can send a token or a randomly generated serial number. I'm thinking the payment page will fetch the amount from the token that was passed and process the payment then return back to the site. Because products are online (credits).

Any help would be great.

Thanks.
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Question by:kalmen
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by:minichicken
minichicken earned 200 total points
ID: 12217477
Hi kalmen

You can try www.2Checkout.com to setup your ecommerce site, they do offer a service with getting an merchant account. They basically charge $49 to setup an account with them (dont know if that includes the merchant account or not, but i doubt it includes). With 2 Checkout you can use your own cart or use their cart. In your case, where you have everything set on your side, all you need is to pass the values to the 2Checkout payment gateway to do the payment process and it will sent back transaction values. You can manage your own setting through a portal. They also offer multi currencies. Maybe on the down side of 2Checkout is that theyare quite high on commission, something like $0.45 per Sale and 5.5% of Sale Amount, but the setup is pretty reasonable.

If you however would like higher service level then you might want to consider www.worldpay.com. They offer all sort of services that ecommerce should have, the service is superb, however to start up with them is a bit of pain at first. WorldPay requires you to submit a business plan for the products that you want to sell, sales forecast and projections and they will do a risk assessment on your online business. If they consider your online business as risky or you have not made the sales close enough to your expectations, WorldPay will require you to pay some kind of deposit and hold on to your money until your business is stable and sales level is stable. I am sure WorldPay is superb, I've also heard a few good reviews on them, but I have a client that was going to sign up with WorldPay and there was that money holding on by WorldPay issue, so I suggested him 2Checkout, which was a better option for him. If money is not an issue and have no problem having them keep your money for a period then WorldPay should be a better option for you.

Hope you find this useful :)

j311y
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by:coreybryant
ID: 12217773
I am not really sure if I understand your question.  Do they not allow you to open a merchant account because you are in a third world country or is it because you work with a private company?

There are some instances in which you can get a real merchant account if you have a United States Bank account & a United Stated address.  

I do not think 2CO will support a site in which onine credits are used though.  I remember seeing that at one point, but 2CO's site is so badly created - it is very difficult to locate their AUP.  This is something that you want to make sure you are in compliance with first before signing up.  Otherwise, you run the risk of having your account frozen - maybe up to six months

-Corey
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by:minichicken
ID: 12217828
True True True..... I really think there should be a standard for ecommerce transactions, like a standard internet currency. There is so many issues with regards to ecommerce payments and multi currencies and all. Like for example in South Africa's banking model, multi currency is not supported which makes totaly no sense at all for ecommerce, where it a global thing and in South Africa, you will have to forced to trade in ZAR (South African Rands), which consequently forced people in South Africa to go to other foreign company's for multi currency or just even to trade in dollars.
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by:coreybryant
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ID: 12217887
Unfortunately, there will never be something standard.  Visa / MasterCard control it.  And they are always re-interpreting their rules / regulations to suit them.  2CO has to maintain their account otherwise, Visa / MasterCard will pull their account, something that they want to do because they hate third party processors.

Here in the United States, we have a social security number and a driver's license number - something that is easy to track us if we ever did start up a website for fraudulent purposes.  Until other countries have that similar type of number - there can be not set standard.

And then since you mention the bank - which is something completely different than e-commerce.  Each country's banks are governed by a separate entity.  In the United States, it is called NACHA.  

-Corey
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by:kalmen
ID: 12218414
Ladies and Gentlemen,

Wonderfull comments indeed. Appreciated, definitely.

To make things clearer, Corey, I am not allowed to create a merchant account because I'm a private company. If I were government, it would have been easy. And without a merchant account, the company, <a href="http://www.comtrust.ae">comtrust</a>, will not provided me with the e-payment facility. They're quite cheap too.

Have yous ever dealt with Yahoo store? Does it offer anything like that?

Cheers.
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by:kalmen
ID: 12218430
Pardon the a tag. My mistake.
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coreybryant earned 300 total points
ID: 12218553
Well I do work a little with Yahoo, but something you first want to keep in mind.  To accept credit cards on your website - you need to things: a merchant account provider and an electronic payment gateway.  

An electronic payment gateway is the virtual connectivity between your website and the credit card companies (e.g. Visa, MasterCard, Discover, American Express, JCB, Diner’s Club).  It is similar to the point of sale (POS) terminal that you find in the grocery store or restaurant.

In the United States, there are a number of them:  LinkPoint, Authorize.net, Verisign, Cybersource, Itransact, etc.  

Authorize.net is probably the most advertised electronic gateway.  A lot of people think they can sign up with them and immediately start to accept credit cards.  They do not realize you need a merchant account as well.  Authorize.net even uses the First Data platform to help facilitate transaction processing.  Since we started using Authorize.net in September 2003, they have been down about seven times. This meant thousands of dollars  lost in sales for merchants around the United States.  Authorizenet.com’s prices are usually about $15-$25 a month and each transaction is about $.10-$.15 in addition to the transaction charge imposed by the merchant account provider.  They also charge $25 a month for recurring billing.  

The LinkPoint payment gateway is probably one of the strongest out there.  It is owned by the First Data Corporation.  First Data has been doing electronic money transfers since 1871 and they were the first processor of both VISA® and MasterCard® bank-issued credit cards in 1976.  First Data processed 12.2 billion transactions in North America alone in 2003.  The last time the LinkPoint gateway went down was in January 2002.  LinkPoint’s charges are usually about $15-$25 a month. No other fees are charged, except for LinkShield.  Recurring billing is free and no other transaction fees are imposed.

Verisign also has a payment gateway.  Verisign is probably the most recognized name because they also offer other services and products for the internet (i.e. SSL certificates, domain registration, hosting, etc).  You do not need to purchase everything from Verisign to have a successful e-commerce business.  Verisign’s prices are a little more than the others.  They charge extra for their API and recurring billing.

The above gateways offer both an API and a secure website to capture your consumer’s credit card data.  An API allows you to capture credit card data on your secure website & process the transaction.  The consumer never leaves your website and you maintain consistency throughout your website.  If you wish to use the gateway’s secure website, there is usually some simple HTML coding to direct your consumer over to that webpage. Once processed, they will be re-directed back to your website.  

Using a third party processor (like 2CO, Paypal, CCAvenue) means you have to use their own proprietary gateway.  This helps to stay in compliance with Visa and MasterCard.  This also means that your customers will be directed over to the third party processor’s secure webpage.  Some will allow you to co-brand this page (your logo and theirs on the page), but the consumer must know who they are paying and this page must state that.    

Comtrust seems like a gateway only.  There would still be costs involved with the merchant account provider.  

Now I know in the United States, anyone can get a merchant account.  It can be a private company, LLC, an individual etc.
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by:kalmen
ID: 12220955
Wow... Amazing.. I think I need to study these gateways one by one. Cool United States... I don't really know why these banks do not open merchant accounts...
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by:coreybryant
ID: 12221004
Well banks are not really in the processing business.  A lof of banks in the United States outsource it to other companies. Chase has a partnership with First Data.  So Chase can process the CCs as well.

-Corey
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by:NYstuff
ID: 12242286
Try Charge.com, they have many services.
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by:coreybryant
ID: 12242321
www.charge.com is a reseller for Cardservices International basically.  A lot of resellers for Cardservice can offer the same thing

-Corey
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by:kalmen
ID: 12246900
Upon study, and consulting with my team, we believe opening a merchant account is the best choice and then subscribing to a payment gateway.

Correcy me if I'm wrong, but an online merchant account is like a bank account for online transactions right? Would it be insured? if the bank or the holding institute goes bankrupt or something? Like I have an account with a brokage and they state that my money is insured up to 500,000 USD... or something like backed up by the federal reserve.

Also, I noticed something called international merchant account... If I'm a non-US citizen, can I open a normal or do I need to open an International Merchant account?

Am I thinking right?
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by:coreybryant
ID: 12246968
It depends. There are some processors that will allow you to open up a merchant account in the United States if you have at least a United States bank account and a United States address.   But there are also usually limitations (like $10,000 processing a month, and the discount rate might be a bit higher (3.5%)).  In most cases, the answer is yes, but there are always exceptions.

As far as the processing / online transactions,  That is a different,  a lot more complicated.  Look at what happened with Paysystems.  They were a third party process & then they decided they wanted to offer merchant accounts (for the United States & the UK).  And then all of a sudden, Paysystems said no more third party accounts.  A lot of them still have not receive their money.  Your money for a merchant account is held in a bank.  It is your money.  For example, Cardservice International is a registered service provider for the following FDIC-insured banks: First Financial Bank, Denver, CO and Wells Fargo Bank.  So this is where your money is held until they deposit it into your account.  Cardservice has been in business since 1988 & they are owned by First Data - a company that has been around for over 100 years.  No worries there about them going bankrupt

-Corey
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by:kalmen
ID: 12247789
I see, Corey. So if I wanted to convince my colleagues of a solution, I can tell them that Cardservice is a registered service provider for the following FDIC-insured banks: First national bank, Denver, CO and Wells Fargo Bank. And all money from payments is held in one of those banks until they deposit it into our account (which has to be a bank account in the united states? or anywhere in the world? or like a bank such as H.S.B.C. which tells you that your bank account is global?)
And that Cardservice has been in business since 1988 and they are owned by First Data which has been around for over 100 years - so the chances of them being bankrupt is almost nothing.

Can you tell where I am confused? :)
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by:coreybryant
ID: 12247983
For Cardservice, assuming you are not in the United States, you do need a United States bank account and a United States address.  The money is usually deposited aftera  5 day ACH hold (if you are not in the United States).  This is to protect Cardservice.  And once again, this is not not the case for U.S. citizens.   I am not certain about HSBC (I usually do not handle the international clients that much), but I am thinking (assuming) that as long as CSI can deposit the money into a U.S. bank account, it would be fine.  

-Corey
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by:kalmen
ID: 12274433
Thanks Corey. I appreciate your time and input.
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