NFIB

Accepting Credit Cards Online
04/ 15/ 2002

by Juan Hovey

Do you dream of doing business on the Web? It's not a sure-fire way to riches, but going online is probably easier than you think—and if your experience is like that of Jeff McElroy and his partner Dave Thomas, it can do good things for your cash flow.

"We think it's going to eliminate our accounts receivable," McElroy, 31, says. He and Thomas, 33, run Pro-Tel Voice and Data Networks, LLC, (http://www.protelusa.com) a Kennewick, Wash., supplier of pre-packaged, pre-programmed phone and data systems for hotels. With 10 employees, the company went online last summer serving accounts as far away as New York, and the partners no longer worry about slow-paying customers.

"Five years ago we would negotiate a contract for a lump sum and take progress payments as we went along," McElroy says. "And we had to wait for the checks to come in the mail. We were acting as our customers' bank, and we became bill collectors instead of business people."

McElroy and Thomas get their online credit-card processing services including online authorizations, "shopping cart," checkout, fraud detection and prevention, and full transaction reports—from CreditCardProsessor.com Inc., found at http://www.creditcardprocessor.com, one of scores of providers of online credit card transaction services in the U.S. Many regional and national banks offer similar services. (To find a provider type "credit card processors" or "merchant services" on any Internet search engine.)

How to do it

Many credit card processing companies offer one-stop shopping for the fledgling online operation, including templates with which you can design your own Web site. Setup fees for online credit card processing run about $400, and per-transaction fees range anywhere from 2 percent to 15 percent a huge range reflecting an old truth about commerce: caveat emptor. You may pay additional fees based on the number of items in your online store plus per-transaction authorization fees, fees for monthly statements, and often other fees.

"It's possible to be gouged," says Dan Lyons, founder and president of CreditCardProcessor.com, "so watch out for hidden costs for things like cancellations and renewals.And make sure you get your quote in writing, and read all the documentation before you sign on the dotted line."

Also, be sure to give your customer the option of ordering through the mail or over the telephone, as many are still not comfortable buying online.
The payoff? As Jeff McElroy and Dave Thomas discovered, the Internet speeds everything up, including cash flow the lifeblood of any business. Last fall they used their own increased cash flow to found a second business, Clear Sky Broadband Inc., a wireless Internet service provider.

You've only just begun

Here's where to go for more help in e-commerce:

Web sites:

http://www.wilsonweb.com One of the largest online reference sources about e-commerce.

http://www.entreworld.com Resources collected by the Kauffman Center for Entrepreneurial Leadership includes how-to articles, discussion boards and advice from other entrepreneurs.

http://www.ebusiness.com Provides definitions of e-business basics with links on where to find more.

http://www.zdnet.com/enterprise/e-business/ News, research and resources on e-commerce.

http://www.smallbusiness.com Advice from other small business owners on e-commerce and more.

http://www.nfib.com How-to articles and advice

http://www.bigstep.com Free online guidance for small businesses getting into e-commerce

Books:

eBusiness Legal Kit for Dummies, by Susan P. Butler (IDG Books, $29.99).

E-Service, by Ron Zemke and Tom Connellan ( AMACOM, $25).

E-Loyalty: How to Keep Customers Coming Back to Your Web Site,  by Ellen Reid Smith (HarperBusiness, $26).

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It just seems longer:
8 seconds: The amount of time customers are willing to wait for a Web page to load

$362 million: The amount per month businesses lose because customer's find their page too slow to load

Source: Zona Research

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This article originally appeared in the January/February 2001 issue of MyBusiness Magazine, NFIB's member magazine.

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