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'How exactly does Ecommerce work'?
By: Lisa Schmeckpeper
This has to be the most-frequently asked question I receive from newbie clients. They know people are buying online and they know they have to accept credit cards if they want to stand a chance in all the net-based competition, but beyond that realization, most are clueless as to how it all works.
I can`t blame them, really. It`s a confusing online world out there and a lot of people who are trying to tell them how it works are really just trying to sell them their own solution. It`s kinda hard to trust the validity of what they say when profit is a huge motivating force behind their persuasive suggestions.
And to be sure, there is profit in this Ecommerce game! Money is to be made at many steps along the Ecommerce path. With that in mind, let`s take a walk along the path to Ecommerce, and take a look at the signs--or components--that are necessary to take part in the Ecommerce excitement and potential profits.
1. The Merchant Account:
This really is your first step towards Ecommerce, unless you have chosen to go through a payment facility and are willing to give up a rather large portion of your sales in fees. The up-front costs of a merchant account can be hefty for a small business, but the long-term savings can be substantial.
This is especially true if you are selling big ticket items. For instance, on the sale of a $300 product/service through a payment facility you could pay between $20-$45 dollars or more in fees. With your own merchant account it will probably cost you about $9. With the typical fees and equipment for a merchant account startup costing about $1,500, you can recoup that cost rather quickly.
A merchant account comes with a merchant identification number. That is about all it gets you. In order to process transactions you need either a terminal (the little box that you swipe your credit card through at retail outlets) or software that runs on your PC and will dial up the merchant via your modem, and then process the transaction and deposit the money into your bank account.
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