Fraudulent transactions cause losses for credit card organisations as only a small percentage is actually recoverable, either by locating the thieves or recouping a portion from merchants. In the Visa and MasterCard rules, a merchant’s processing bank is fully accountable for every transaction processed.

If the merchant conducts business illegally or recklessly and causes lots of chargebacks, the provider can be left with huge losses. To prevent this, the provider passes some of the costs on to the merchant if they haven’t carried out sufficient security checks and completed all the card details correctly, these are the chargebacks. The merchant then has to cover the total cost of the transaction, transaction fees and is forced to pay chargeback penalty.

Because of these chargebacks, online merchants are recognising the need to take some responsibility in installing precautions to protect their online stores from credit card fraud. Anti-fraud systems are being acquired by merchants using highly secure anti-fraud tools and merchants are commonly signing up for services offered by the main credit card organisations, Visa and MasterCard SecureCode aim to dispel some of the apprehension customers feel when buying products online. These services involve customers registering a password with their card issuer and every time they use the card online they are asked for their personal password.

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Credit cards have become the most common and convenient way to pay online but there are still people who don’t own one; you don’t want to turn these people away and lose a sale. Whereas written cheques used to be the norm, there are now electronic checks (eChecks) available. No need to write out a cheque, post it, wait for it to arrive and clear, customers can merely enter their bank details by electronic means.

The main headache for online merchants is security. Along with your business information, your customers’ personal information moves through your gateway every day. This information is invaluable to hackers; when choosing a gateway ensure you select one that uses the highest security techniques to keep information safe. These should include security schemes operated by the main credit card providers, such as the Visa Cardholder Information Security Program, MasterCard Site Data Protection, and Discover Information Security and Compliance. If your gateway provider doesn’t comply with these you could end up paying higher fees or your account closed down. Check out the Internet for a quality payment gateway provider that offers a high level of anti-fraud tools to protect you and your customers.

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In very simple terms, the gateway processes online payments by connecting your websites order form with the merchant account and returning the answer to the merchant and customer, either approved or declined. Although the gateway itself actually only connects the website to the merchant account, larger payment gateway providers offer additional services, such as merchant accounts and shopping carts.

Gateways offer a range of features that will increase security and revenue. Listed below are several of the more common features to expect.

The most important feature are fraud prevention tools. Merchants continually neglect this part of their business; fraudulent transactions result in loss of revenue, something no merchant wants or needs. Merchants will be aware of chargebacks and the penalties these can incur; credit card fraud is prevalent, increasing daily as hackers come up with advanced methods to obtain card information. Utilising anti-fraud tools will mean less time inspecting suspect transactions and more time generating sales. Basic anti-fraud tools include an Address Verification System (AVS) that checks the customers’ delivery address against the address the card issuing bank has on file, and CVV2, the 3 digit security number printed on the back of credit cards VISA, MasterCard and Discover Card.

Another addition to expect is a recurring billing system, particularly suitable for subscription and membership based businesses. Many merchants have customers that order products on a regular basis, if billing has to be done each month to the same customer using the same details it can waste valuable time and energy. With recurring billing you just supply the gateway with the customers billing information and how regularly to invoice them (this only needs doing once) and the gateway conducts all future transactions.

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Payment by credit card is by far the most popular payment of choice and if a merchant doesn’t offer this, the consumer will simply go elsewhere; competition is fierce.

Setting up a merchant account with Our Payment Gateway providers enables the major credit cards to be accepted on a website, including Visa, MasterCard and Visa Electron for UK customers. The account allows for authorisation, settlement and management of credit card transactions online.

Internet sales can be managed worldwide using a single payment gateway and payments processed in real time. Our Payment Gateway providers also have Virtual Terminal software, a payment terminal that allows you to accept mail order or phone payments if for some reason the information can’t be collected from an internet based system. So transactions can be processed either online or offline.

Access to the payment gateway will ensure all transactions are easily processed with all the major banks and is available to merchants in all European Countries.

The gateway used by Our Payment Gateway providers has been designed to be as easy to use as possible, giving absolute control over payments and transactions; the option to print out statements is even available. The system is extremely powerful and several merchant accounts can be handled on one server. The system is able to handle all major clearing banks and several clearing banks can be installed at once.

Our Payment Gateway providers utilizes the Address Verification System (AVS) which confirms the identity of the credit card holder. The system works by confirming the billing address of the credit card is the same as the one on the application form held at the credit card issuing bank. Security Code Verification (MasterCard Secure Code & Verified by Visa) was introduced to improve the security of Internet payments.

Basically it is 3 numbers printed on the card or signature strip and required by merchants to secure ‘card not present’ transactions taking place over the Internet, on the telephone, by mail or fax. Due to increased attempts at card fraud, it is now obligatory to supply this code when the cardholder is not present in person.

This article is written by Accept Credit Card Payments . biz

Also I see that people name a e-wallet solution like paypal or moneybookers as payment gateway, so here are a few clarifications which I hope someone find useful.

First of the e-wallet solution like paypal and moneybookers are neither a merchant account nor a payment gateway, they are electronic money services which let you quickly accept payments from millions of users around the world.  Sure people can pay you without to open a paypal account but still it isn’t the same, I will cover this in another post in the right forum.

A Payment Gateway is an electronic gateway which connects your website with the bank; most banks require using a 3 party payment gateway since they do not allow merchants to connect directly to the banking systems.  

Once you have integrated your website with the payment gateway, you will still need to be accepted by a bank and sign a “Merchant Account Application” or “Credit Card Acceptance Contract”; it is the same just 2 terms.  Many Payment Gateway Providers also called Payment Service Providers or in short PSP’s have already an agreement with one or more banks where they are able to help you to become the merchant account.

However sometimes it is useful to take in consideration that they might be other Banks which are cheaper and maybe have better conditions then the one your PSP’s suggest to use.

This part of the article has been taken from our Online Payment Forum, and the entire article can be found by clicking the link.