Implementing E-Commerce for Your Dot-Com          
by Brian Chmielewski

Web companies are coming to grips with the idea that the new economy functions a lot like the old one, where only the strongest are likely to survive in a crowded marketplace. It's no longer sustainable to have 200 companies with the idea of each taking in only 1 or 2 percent of the profits in their industries. This makes it glaringly clear that a lot of companies are going to fail. So, how do you avoid being one of those companies? There are as many theoretical answers to that question as there are unique challenges to small businesses.

E-business today is more than putting a dot-com behind your name and having a Web site. Site owners have to look at the culture of their business, the structure of their business and the very way they interact with their marketplace. They also need to enable a simple solution for accepting a myriad of payment demands.

Merchants realize that to become e-commerce enabled means to increase the level of sales from their Web site and facilitate market growth. So, what does it take to become e-commerce enabled, how much does it cost to do so and is it worth your time and money? The answers to these questions are crucial in making your Web site more effective for business.

What are the components of e-commerce?
A Web merchant faces many challenges when setting up his or her first online store. To join the electronic commerce generation, you need five crucial items:

1) WEB SITE
Obviously, you must have an online presence to connect your business with prospects and customers. While there are several services that offer "free" web sites, this is not the best option for forming your Web-based business. Free site services often require you to display banner advertisements on their behalf and are limited on the amount of disk space and custom programming that you can install to make your site more interactive. It is better to choose an original domain name that reflects your business and host it on your own. Registering a domain name costs, on average, $70 for two years of licensing. Virtually hosting your site with a legitimate, full-service hosting company starts at $29.95 per month for basic plans and can expand all the way up to $1000 per month for your own dedicated server. Most businesses can start with a basic plan and reevaluate their needs as the business grows. Smaller hosting providers like USA Domains tend to go the extra yard in meeting the hosting needs of new and small businesses.

Let's not forget the layout and graphic design of your site. This is potentially the most critical component of your business, since image, reliability, ease-of-use and trust are major factors that visitors discern from the look of your business Web site. If your site does not reflect the image of a professional, legitimate business, you WILL NOT receive orders no matter how great your products or services. If you are serious about doing e-business, do your research on what site navigation and layout is successful, learn Internet programming languages like HTML, JAVA and PERL, or hire a professional Web developer or designer to build your site for you.

2) MERCHANT ACCOUNT
Just as important as your Web site is your ability to quickly accept payment from customers. If you're planning to only accept cash or checks, you're bound to lose money. Since the average cash or check sale amounts to $9.00 while average credit card sales are $40.00, successful companies know that accepting credit cards increases revenues. There may be a few exceptions where credit card payments are inappropriate, but a majority of customers prefer to pay by credit card when making online purchases.

Jupiter Communications, a respected New York research firm, reports that 88% of online transaction revenue comes as a result of credit card transactions. Their studies indicate that accepting credit cards will:

• Capitalize on customer impulse buying and customer loyalty


• Improve your business' competitive edge and your Web site's credibility


• Make money while you sleep


• Make it convenient for your customers to buy


• Level the playing field - compete with "the big guys"


• Expand your market - accept orders worldwide


• Offer customers peace of mind with secure payment options

Establishing a Merchant Account at Your Web Site
Before establishing a merchant account, the smart businessperson will determine company needs, examine resources, ensure security and thoroughly research all options. Begin by considering the nature of the products being sold. If they are large and expensive, seek a merchant account that offers a higher flat-rate transaction fee and minimizes the discount rate. Even a hefty $1.00 transaction fee will be far lower than a 2.5 percent deduction from the charge. If you rely on small, high-volume sales, even a 30-cent transaction fee can erase your profits.

That's right, merchant account providers have various rates and fees associated with their services. All merchant account providers have a discount rate, a transaction fee and a monthly statement or management fee. Some providers also charge additional fees, such as a batch header fee, a monthly minimum fee and an application or set-up fee. So, what should you look for?

Most merchant accounts charge somewhere between 20 cents and 50 cents per transaction with a 1.5 to 3.0 percent discount rate. Add to this a few hundred dollars for set-up costs, another $50 to $80 for leasing a terminal or transaction software, and $20 to $50 monthly sales minimum. Be sure to cover any additional expenses like charge back fees and programming charges when talking with your merchant account representative.

Merchant account fees and charges are not always fixed rates, so if you'd like to stick with your current bank, approach them with competitive lower fees elsewhere and they may lower their fees to keep your business.

Examine your resources
Different merchant account providers also require distinct purchasing procedures at your site. If you plan to process your orders manually, will a secure Web form be good enough or will your require extensive modifications to your site, including programming code? If you don't program or haven't hired a programmer, you may find some card-processing systems too complex to use. Luckily, a number of providers are now offering simplified, comprehensive turnkey systems which include a "shopping-cart" program, order verification and processing, and automated shipping of orders straight to your email account.

Overcoming merchant hurdles
Merchant providers may have other obstacles besides their fees. Some services will not accept "high-risk" accounts, a term that usually encompasses adult sites, online casinos, and sites operated by non-domestic companies. There are plenty of exceptions, but you should expect to pay higher fees. As a startup firm or individual with a bad credit history, be prepared to have your financial background probed and know that not every business owner will qualify for the lowest rates.

With the new evolution of electronic commerce, obtaining a merchant account is becoming easier than ever for home based and Internet-based businesses. The costs and fees to accept credit cards are declining and merchant providers are accepting more accounts. So, if you're in the market for a merchant account, you can probably have one by the end of the week.

3) TRANSACTION SOFTWARE
The next step is to have an interface for the actual processing of orders. The most common way for a smaller merchant to do this is offline. That is, you download customer orders and then manually process them just as in a brick-and-mortar store. Choices include an electronic terminal or transaction software.

Since it is essential to protect yourself and the authorized cardholder from any fraud, any software you use should request detailed information such as address, phone number and of course credit card number. Once entered, your customers' information is sent to an authorization network, which confirms the validity of the card and billing request with the address to which the card is registered (called Address Verification Service or AVS) and returns your request as authorized or declined. It takes only a matter of seconds for the authorization network to process your request.

Charge backs for credit card fraud or mischievous behavior can affect your rating as a merchant (and can lead to additional service costs), so it is always important to verify electronic orders via telephone or email. Beyond being just good customer service, calling a cardholder may help to signal that a credit card has been stolen, avoiding any charge back to your account. Expect your merchant account provider to provide this software to you for a fee at the time you are setting up your merchant account.

4) SECURE CERTIFICATE / SECURE CONNECTION
One of the most overlooked components of e-commerce is the secure certificate or secure connection. If you have ever ordered online you may notice that sensitive information is usually always delivered at a Web address that begins with https://, rather than the standard http://. The 's' indicates a secure server is being used. This is often reflected in your Web browser security image (a lock) to move from the unlocked to the locked position. If you are virtually hosted, you may have the option of sharing a secure server and a secure certificate. While sharing the secure server helps in reducing your costs, sharing a secure certificate can confuse your customers and cause you to lose sales, since the certificate holder name appears on the digital certificate. If the certificate holder's name is not your company name, the customer might think that an error has occurred in the transaction and they may revoke their secure information from being processed. Verisign is the premier supplier of secure certificates.

What is a secure server?
Secure servers have software programs that encrypt information being sent through them. The most common encryption being used, 128-bit, keeps ordering data confidential for customer protection. Computer hackers can intercept data not sent via a secure server. Secure servers move slower because of the encryption process, so there is nothing wrong if it takes a few more seconds for a screen to come up or a form to be processed, it is simply the secure software doing the job. Once order information is securely sent it arrives to you within minutes via e-mail.

5) SHOPPING SOFTWARE / SHOPPING CART
Shopping cart software is software that allows you to deliver your products or services to site visitors in a standard interface that looks much like an electronic catalog. The beautiful thing about this software is that it allows visitors to place multiple product orders from your Web site. While some minor configuration to your HTML and the software is required, once in place, cart software automatically calculates and totals orders for your customers. While there are many shopping cart software programs available and many ways to install them, most must be installed on the same server hosting your site or on the secure order-processing server.

Most merchant account providers also provide options for software depending on what type of system you are running. Good merchant providers also have the capability to interface the merchant software with any shopping cart on the market. When choosing a shopping cart software package, look for one that has good technical support, that comes with a period of free upgrades and that contains additional useful utilities, such as e-mail auto-responders or report interfaces. Be sure that your customers' data is held securely somewhere on your local computer or server.