In this day and age, if you’re going to sell anything online, you have to accept online payments. From online payment services to tried and true credit cards, you have options that are tools to help your small business grow.

You ask: is it really necessary? Why can’t customers just call me? In a recent poll commissioned by Cybersource, research showed that sellers who accept four types of payments — such as credit cards, online checks, PayPal and similar services — have more visitors convert to customers than do merchants who offer a single payment method.

According to the data, merchants can convert as many as 20 percent more customers by offering them more payment types to choose from. Those merchants offering one payment type, such as general purpose credit cards, for example, convert 60 percent of their shoppers.

While some amount of shopping cart abandonment is to be expected in e-commerce, making a variety of payment options can help keep this to a minimum.

Accepting Credit Cards - What Do You Need to Know?

If all of this sounds complicated, don’t worry. We’ve collected a few items to consider when preparint to take online payments:

If you want to open an online store, you’ll need a way to accept credit card orders. You’ll need three basic things to accept credit cards: a secure way to transmit the card number from the user’s browser to your Web server, a merchant account with a bank, and payment processing software to link your Web server to the bank.

Security. The most popular way to transmit credit card data securely over the Web is with the secure socket layer (SSL) protocol. You (or your Web hosting provider) will need to use a Web server that supports SSL, and your customers’ Web browser must also support SSL (most, if not all, do). You’ll also need a digital certificate that identifies you as a legitimate business — these are available for a fee from companies such as VeriSign and Thawte, and many hosting providers will handle this for you for a small fee.

Merchant accounts. You’ll need a business account with your bank if you want to accept credit card orders. Most banks offer merchant accounts — the problem is figuring out which one offers the best price, which is typically a percentage of each credit card order you submit. Most banks charge higher fees for what they consider risky accounts, such as those with large numbers of charge backs or fraudulent charges.

Payment processing. This is where things get really tricky. Dozens of companies offer transaction processing software that sends the right information to everyone involved in the sale — your bank, the customer’s bank, the bank issuing the credit card, and so on. But most banks work with a handful of the biggest companies, including Authorize.Net and CyberCash. Some processors lease their services to you for a monthly fee, while others combine a monthly fee with some percentage of your sales.

Some Online Payment Options

1. PayPal (www.paypal.com) lets consumers send money to anyone with an e-mail address. Funds are drawn from the consumer’s credit card, debit card or checking account. PayPal offers 100 percent protection against unauthorized payments sent from a user’s account. Its transaction fee is 3.3%, and there is no merchant setup or high transaction fees that are normally associated with credit card use.
2. Western Union lets online retailers accept checks through its MoneyZap service. Western Union said the service opens up the world of e-commerce to consumers who write 18 to 20 billion checks annually at point-of-sale locations and to the more than 80 million Americans who don’t use credit cards, and relieves the burden of processing online check transactions.
3. Google Checkout is another fast, secure, and convenient way to shop online. Google Checkout makes online shopping easy by providing a single login for purchases across the web. For merchants, Google Checkout is a new way to process sales. It works with Google AdWords to make it easy for shoppers to find you and buy from you. With Google Checkout, merchants can process sales for free. For every $1 you spend on AdWords, you can process $10 in sales for free. You can process any sales that exceed this amount at a low 2% and $0.20 per transaction (checkout.google.com).

Consumers will continue to use a variety of options when shopping online. As a merchant, your job is to understand their needs and give them the options they’re looking for. In the end, your business will thank you.

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