e-Commerce Payment Systems

One of the main elements of an automated order processing system (e-commerce) is the ability to accept some kind of payment electronically. The primary method for doing this is to accept credit cards as a merchant.

Although I have been a credit card merchant for many years, I've recently found that if you want to process credit card orders automatically today, you need to start with finding a bank that already has customers who are using e-commerce. Until a few months ago, I processed credit card orders by taking the information over the phone and manually filling out a credit card ticket which I then delivered to the bank. About three months ago, I casually asked a second bank if they supported merchant credit card services for companies involved with e-commerce on the Internet. To make a long story much shorter, the answer was that I could cut my processing fees in half by changing, but they were still waiting for the credit card processing service to implement automated processing of Internet credit card orders. I'm now entering the credit card information into a touch tone phone instead of taking the tickets to the bank. And I'm not paying nearly as much for the service.

But that's not what is meant by "e-commerce".

Every month I get a number of inquiries via email from people who are interested in my newsletters but they don't want to send their credit card information to me via email and they can't reach me by phone when they have the time to call. They would prefer to sign up online but they want a secure (encrypted) server system and a system that will process the order in "real-time" -- meaning right now. Among other things, they may want to have access to the back issues and research reports that are available to paid subscribers but they don't want to have to wait three days or more to get the access codes. Automated, real-time credit card processing is an essential element of Internet e-commerce.

Every day, I get a dozen email ads offering to help me to provide credit cards to my online customers. I've looked into a few of these ads and all of the ones I've checked are basically offering to process my credit card orders through their merchant account -- at a huge discount compared to what I'm paying. My present discount rate is just over 3% and some of these services want as much as 10% to process credit cards.

Another service I'm using is called "e-gold". They provide a storage service for gold, silver and two other precious metals. A customer can go their web site (<www.e-gold.com>) and use a credit card to set up an account with a prescribed amount of money. The money is converted in a quantity of gold or other metals and the account is maintained on that basis. Then the customer can transfer part of their account to my account. (My account number is 102859). They then have to send me an email to let me know that the transfer has been made. I then have to log on to my e-gold account to verify that the payment has been added to my account, after which I can give the new subscriber the access codes to my subscriber's web site. It's still not an entirely automated process and it takes almost a long as having someone call me and place an order by phone. However, it is a system that can be used by anyone in the world who has access to the Internet and a major credit card like VISA or MasterCard.

I've recently bought a copy of PGP but haven't had time to install it yet and learn to use it, although I plan to do that so that anyone with PGP can use it to send me encrypted credit card information. That's somewhat of an improvement over a phone call, but not everyone has PGP.

Someone told me about Hushmail at <www.hushmail.com> and I've signed up for it. (If you need to send me an encrypted email and are using Hushmail, you can send it to vkj208@hushmail.com.) It's free and is presently supported only by some unobtrusive banner ads. I did have to make two phone calls to the company to resolve a couple of problems in getting set up that weren't clearly covered by the instructions. So if someone wants to use this system to send me an encrypted email, he'd better do it during working hours or be smart enough to figure everything out without some help. I discovered from signing up for this service that I'm no longer using the latest version of Netscape. If you have a version older than 4.7 you almost surely have to upgrade before you sign up. If you use Explorer, you might also want to be sure that you have the latest version. But even with a free and relatively simple way to send encrypted email, a customer first has to take the time to sign up for hushmail in order to send me encrypted credit card information. And even then they have to wait for me to respond with the access codes to my subscriber's web site.

I've not been interested in using Internet Malls before now, but I've recently come to realize that it doesn't really matter if the mall can generate any traffic to my "storefront". Some of them offer e-commerce as part of their service. As long as I can link from my web site to theirs and then back, that may be a temporary solution to the e-commerce problem. But I've read that they also charge some hefty fees for the e-commerce service and I haven't had time to compare those charges yet.

As for doing e-commerce from an ISP outside the US, you should be absolutely sure that the ISP has this process implemented, tested and working. In addition, I'm told it's much harder to get a bank and a credit card processing service to do business with you if you are not a long timer resident of their country. The reason is because they can't easily verify your credit record if you don't live in their country. I will be looking for further information about how a resident/citizen of country A can get an e-commerce site established in country B and will share that with you in future issues of this newsletter.

Right now I have literally dozens of leads to explore to find ways to add automated credit card processing or other payment systems to my web site. One of them that I will look into shortly is the paypal system at <www.paypal.com>. In future issues, I'll share my discoveries with you about PayPal and any other alternate methods of paying for online purchases.