3) IN-HOUSE PROCESSING
In-house processing is done from your own domain on a dedicated or shared
server using your own gateway interface software. You will still need a
merchant account from an acquiring bank.
You almost never connect direct to
financial networks, but process through a payment gateway which maintains
proprietary high speed connections to the network. A payment gateway provider
supplies software for installation to your server with an API (Application
Programming Interface) instruction set for connecting to their gateway
server. For instance, CyberCash is a gateway service provider. They supply
you with a Merchant Connection Kit (MCK). This is software that you configure
to interface between your storefront and their gateway.
Getting set up for in-house processing will require software coding with
installation to your server. However, this also gives you the freedom and
flexibility to decide what back office capabilities you want to incorporate.
Back office operations almost always include order logging to a table in the
main database. They can also include sales log analysis, bulk e-mail operations,
a virtual terminal operating from order log information for processing the
credit card transactions, order tracking, and a host of other functions.
Your cost of using the in-house approach will largely depend on the
cost of available coding personnel. However, even the most experienced coding
people may beg for mercy when it comes to some of the more esoteric aspects
of gateway interfaces such as syntax, communication errors, and response codes.
Of course, there will be the usual gateway and the merchant account charges
and, as always, the cost of software upgrades and maintenance.
4) APPLICATION SERVICE PROVIDER
The Application Service Provider (ASP) is often the best way to achieve
on-line, real time, transparent, credit card processing capability integrated
seamlessly with back office solutions in the least amount of time. The ASP has
done all of the software code and gateway interface configuration for you.
The ASP will usually provide an on-line, browser based console, unique to
the merchant, from which all transactions and records can be viewed. The
console will also include a virtual terminal for processing the various credit
card transactions such as credits, returns, settlements, etc. You will need
to maintain your own Merchant account when using ASP services.
You may need to address the issue of interfacing your storefront with
the application. However, many ASPs make this a seamless process by providing
the storefront software as part of the package. Other application providers
will offer a form based interface for capturing and processing almost anything
the storefront can throw its way.
The cost of ASP services can vary widely from a low of $40/month to as
much as several thousand dollars per month, depending on the functions
included in the application. There may also be a healthy setup fee.
Be sure to shop around. Back office ASP services in support of sell side
storefronts are not new, but they have evolved rapidly so that cost and range
of service are not always equitable.
The obvious advantage to using an ASP over creating your own
application is that costs are fixed and software upgrades and
maintenance are included. The disadvantage is that you may have trouble
finding an ASP that provides all of the back office functions you require
at the price you're willing to pay. In almost all instances though, the cost
for an ASP solution will be much less than the cost of rolling your own.
IN CONCLUSION
3rd Party Direct
If you're just getting started with an on-line store, 3rd party payment through
a service provider may be for you. As long as you can live with some of the
payout delays and per transaction charges, this is a very economical way to go.
3rd Party E-Mail
Currently this is the most economical solution for the sale of a single item
from a Web site or auction site. Some of the shopping cart restrictions
and/or proactive customer requirements can, however, put a serious damper on
sales.
ISP Service This is a good method
for small operations but usually provides little in the way of flexibility that
one might expect when considering the costs of both the financial gateway and
the merchant account. A lack of supporting interface will usually require
visiting the gateway provider site to settle transactions.
In-house Rolling your own back
office utilities with credit card processing naturally provides the greatest
amount of flexibility. However, this will require in-house coding
expertise, ongoing maintenance and some of the more esoteric gateway interface
requirements can leave your coders begging for mercy.
An Application Service Provider is probably the best all around
solution to processing credit cards on-line and providing back office management
control. As usual there will be tradeoffs between the services you want and
the price you're willing to pay.
