As with any business, you’ll probably want to accept credit card payments for your photo mug website. Initially, it can be confusing when you try to sort out the options and methods for accepting credit card payments. After slogging through online forums and FAQ’s, I finally managed to figure it out for Kustom Kup.

Here are the steps, divided into easy and technical categories. You may want to hire a web developer to handle the technical tasks.

Setting up credit card processing: easy part

1. If you don’t already have one, open a business checking account in a reputable bank. Then ask for their merchant services department, and tell them you want to process credit card transactions online. This should lead to the establishment of an additional entity called a merchant account. A merchant account will track your credit card sales, and make deposits or withdrawals (for refunds) into your checking account.

2. The merchant services department will tell you which gateway they use. The gateway is the interface with your website that will securely collect and process credit card payments. The gateway is behind the scenes, like the Wizard of Oz. It only communicates with your website’s shopping cart via a script (see technical part, below)

3. The merchant services department will ask you to sign an agreement to certain terms. The terms usually involve:

• a percentage per transaction, such as 2.2%
• an additional set fee per transaction, such as $.30
• a monthly minimum, such as $25.00, that is charged whether or not any transactions occur.
• a monthly statement fee, such as $12.00
• possibly a monthly gateway fee, such as $10, that is charged for the use of their API which communicates with the script in your shopping cart.
• additional monthly fees and percentages for optional acceptance of American Express and Discover cards. (I chose to accept these cards.)
• Lease or rental fee for an optional telephone terminal. This is a keypad for entering sales manually, such as sales you might receive over the phone.

All in all you may be looking at anywhere from $50 to $100 per month in merchant and transaction fees. (Or more, if your business does really well.) Keep in mind that merchant fees are negotiable, and you may want to shop around for the best rates. After you’ve been in business a while, you will have more leverage to negotiate a better rate.

Setting up credit card processing: technical part

1. Shopping cart. You’ll need to install some sort of shopping cart on your webserver. There are many free ones available on the web. Some of the higher-end ones are worth paying for.

2. The script. You’ll need to install on your web server a script that posts transaction data to your gateway (described above). Scripts can be written in different languages, such as php or perl. This is where you may need the help of a web programmer. Your shopping cart may already have the needed script built in. It will need to be customized with your company’s gateway url, merchant identification number, and password.

3. Secure certificate. Ask your web hosting company about this. Secure certificates cost in the neighborhood of $200 to $400 per year. The secure certificate is necessary to make a secure connection to your gateway, so that transaction information sent from your shopping cart is encrypted and can’t be read by casual observers

Other options

This is only the tip of the iceberg for credit card processing. I haven’t begun to discuss other options, such as hosted shopping carts and PayPal. Hopefully I’ll get to those in a later post.