add payment processing to websites

How to Add Payment Processing to a Website

Posted: January 16, 2023 | Updated: January 15, 2024

Online businesses and marketplaces are booming not just in the US but across the world. In 2023, eCommerce is expected to hit the $1 trillion sales mark in the US alone. That’s after the industry saw an increase of 50% in the year prior. As a result, more businesses are wanting to add payment processing to websites they own.

Marketplace platforms such as Amazon, eBay, Etsy, and Shopify have flourished, and more and more entrepreneurs are starting up eCommerce and online businesses daily. How to add payment processing to a website is a constant inquiry among merchants.

Considering the current trends, we compiled this article to share our expertise on how to get started with adding payment processing to a website. We explore what businesses need, whether that’s a merchant account or just a payment gateway, and explain what a payment gateway is. We also explain whom merchants may need to hire and what to expect to pay for the process. Finally, we remind merchants of security considerations that they should keep in mind when looking to accept payments online.

How do you get started if you want to add payment processing to websites?

online payment

Payment processing has started to find new spaces in which it can operate over the decades. It started with physical locations via a point-of-sale system. With the advent of the internet, payment processing went online. As smartphones entered the conversation and businesses became mobile, smart card readers that connected with smart devices started gaining traction. Then there was the introduction of mobile payment processing, and now there are even cloud payments.

Although this may sound complex, payment processing, regardless of whether it is in a physical store or for a website, has the same basic steps. Below are specific components online merchants need to have in place to get started with payment processing on a website.

Web hosting – this service is offered by a company that specializes in providing a facility to set up a website, offer the server space to store information of that website, and connect that website to the World Wide Web network. Web hosting service providers, also known as web hosts or hosts, also provide the infrastructure to add additional widgets to a website, such as expanding server space to accommodate an eCommerce store, setting up emails, a payment gateway, and a virtual terminal. This step is vital when a business is setting up a website or an eCommerce store.

Merchant Account – this is also known as a payment processing account and is the process of businesses setting up a specific bank account to accept credit and debit card payments. This step allows the merchant to accept payment via credit and debit cards, or any other non-cash means consumers wish to pay with.

Payment Gateway – this is the software businesses use that allows them to process payments on a website or other eCommerce sites and marketplaces. Customers enter their card data into the client-facing interface of the gateway, which communicates those financial details via a secure, encrypted transfer protocol to the issuing bank for the online payment to be authorized and the transaction to be completed. This step digitizes the process of accepting non-cash payments that have been set up with the merchant account for the digital and mobile environment.

Transparent (Direct) vs. External Gateways – payment gateways can be set up in a way that they are integrated into a merchant’s website. That is known as a transparent or direct gateway. An integrated payment gateway allows customers of the site to make the purchase and enter their card data to complete the transaction without leaving that specific environment. Alternatively, the gateway can be set up to process the payment on the website, and the customer would have to leave the website to go to a third-party site to enter the card data and process the payment. That is known as an external gateway.

A direct gateway is better as it allows customers to store their card data on the merchant’s website without entering their card data for every transaction. This process also doesn’t require the customer to leave the merchant’s website. Businesses have more control over the security of managing the client’s personal and financial data.

Who do you need to hire?

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customer self-service orders a drink menu with a tablet screen and pays bills online at the cafe counter bar, seller coffee shop accepts payment by mobile. digital lifestyle concept

As an established business, merchants would need to hire professionals who bring value with their domain expertise. To add payment processing to a website, companies will likely need the help of a web developer first to develop a website, as well as eCommerce functionality on that website if that is not already done. The next step will be to embed code and plugins for the virtual terminal and payment gateway of choice if business owners decide to pursue one directly.  

Business owners have enough to manage as it is with running a company. Hiring specialists can help merchants gain insight and recommendations from experts in that industry. Furthermore, a more technical person can offer the best advice on specific software or programming language to use for the best results and what would be the appropriate hosting space given the need of the merchant’s website. 

It is essential to carefully evaluate any professional you are hiring and look for projects they’ve worked on in the past, such as the types of sites developed, if they included eCommerce or merchant sites, and if payment processing was added to those websites. 

Finally, when adding payment processing to a website, merchants should know their risk profile increases as more nefarious individuals try to commit fraud using stolen card information to make purchases on their websites. There may also be attempts to hack the website to steal any stored card data on the hosted space. As a result, having a cyber security specialist who can advise on how to protect the website and customer data will be another area businesses need to focus on as they start adding payment processing to a website.

How much does it all cost?

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There will be various costs associated with businesses wanting to add payment processing to a website. For this article, we will focus on the payment processing side of the charges, as it is difficult to put a number on how much web hosting or web development will cost as those are specific to the nature, size, and complexity of a website build.

Payment processing is generally made up of three specific fees outlined below.

  • Interchange fee – this is a fee charged by the Issuing Bank or the bank that issued the card used to pay for the transaction. An example would be when Joe Smith pays using his Citibank-issued Mastercard credit card, Citibank will receive the interchange fee. This fee is set, cannot be negotiated to a lower rate, and gets paid directly to the issuing bank.
  • Assessment fee – this is a fee charged by the payment network. As in the example above of Joe Smith, Mastercard is the payment network and will receive this fee. This fee is also set, cannot be negotiated to a lower rate, and must be paid directly to the card network.
  • Merchant services fee – this is a fee charged by the acquiring bank. That is the bank that set up the payment processing account for the merchant. The acquiring bank is responsible for accepting the credit card details and securely routing those details through the payment lifecycle. This is the fee that is negotiable to some degree for the merchant. This fee covers expenses associated with the cost of every transaction, a fixed monthly fee, and any expenses related to the merchant’s use of point-of-sale terminals and systems offered by the merchant service provider.

Furthermore, there are costs associated with a payment gateway. Although the prices vary depending on which vendor is chosen, it is essential to note that often merchant service providers have negotiated lower rates that they can pass along to their customers. So, merchants may want to leverage those relationships to get competitive rates via their merchant account provider rather than contract directly with a payment gateway solution provider.

Finally, an important topic related to costs, especially when businesses add payment processing to a website, is card not present transactions. It’s crucial because as companies start accepting online payments via their website, they are classified as a high-risk merchant. That high-risk classification results in higher payment processing rates for merchants.

The primary reason for that classification is that the transaction is conducted online, without any physically visible interaction between the customer and the business. Hence it can never be verified that the person entering that card data is the rightful owner of that card. Other steps are used to ensure that verification, increases the complexity, cost, and risk of these transactions, resulting in higher processing rates.

Building security and resiliency

Most consumers today prefer to shop online, either on their laptop or computer, but mainly via their mobile phone. Changing shopping, and spending habits brought about by advancements in smartphones and mobile technology. Consumers find the smartphone an integral part of their lives – more of it is lived using that device. As great as eCommerce has been, a subsection of eCommerce, mCommerce, which is commerce via smartphones and tablets, was slated to surpass $400 billion[MF1]  in annual sales as of 2021.

eCommerce, mobile commerce, and contactless payments offer tremendous benefits for consumers and merchants. Consumers experience convenient and expedited transactions, while merchants get quick and easy checkouts and happy customers, and the prospect of increased business activity is facilitated by this ease. However, that convenience and ease also pose real threats. Those include increased risks of fraud leading to huge losses. According to Statista, a market research firm, in 2021, 75% of merchants globally reported experiencing some degree of fraud, totaling losses of nearly $20 billion.[MF2] 

If merchants decide to add payment processing to a website, they also have to mitigate the potential of losses for fraudulent activities. As such, by 2025, global spending on fraud prevention and security buildup related to eCommerce is expected to explode and reach $70 billion annually.

Businesses are changing operating standards, requiring customers to create accounts on their websites, which verify their information before accepting any orders. Staff training is another area businesses are bulking up security measures, focused on helping their team identify the difference between a genuine error and an actual fraudulent threat and how to ask the right questions to ascertain which is which.

Conclusion

Consumers’ habits are changing rapidly, and they want to be able to shop and pay on their own terms. As eCommerce and mCommerce continue to flourish, businesses must quickly adapt to these demographic paradigm shifts. They need to quickly understand the latest preferred payment methods and how to accept them.

To add payment processing to a website requires a simple list of steps that must be followed. However, following that list requires deep expertise. So, it’s not hard, but there can be challenging steps. Merchants have many questions about whether they need a merchant account, whether their merchant service provider is their only option, whether they should go directly with a payments gateway, how much it all costs, and if they need to hire any additional help to get this all done. Partnering with the right specialists can make all the difference in the setup becoming a seamless breeze.

Here at Host Merchant Services, we guide businesses and merchants daily on how to quickly start accepting payments on their website and what to expect. We specialize in eCommerce and mobile payment processing with decades of expertise in the payments industry. Finally, with Host Merchant Business Solutions, merchants can easily set up their website and email and seamlessly integrate payment gateways to process payments on their websites.


 [MF1]https://www.statista.com/topics/1185/mobile-commerce/

 [MF2]https://www.statista.com/topics/9240/e-commerce-fraud/#dossierContents__outerWrapper

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