Les Jones

E-commerce > Tuesday E-commerce Report #9

Administrative note: Melissa and I are going on our last vacation before the baby comes. The Tuesday E-commerce Report will return May 25.

Link-clickers in India supposedly get paid to click on advertiser's Web links to drive up cost-per-click ad sales.

The Senate has voted to extend the Internet tax ban for four years. The House had sought a permanent ban.

AXA has sued Google, because a Google search for AXA brings up ads for AXA's competitors. I've written about this before.

Costs for Taking Credit Cards

New e-tailers need to figure credit card processing costs into their budget. Here's a review of the expenses you should budget for.

The secure server certificate

Credit card transactions need to be encrypted. There are usually two ways to tell that a page's contents is encrypted at it is sent between the Web browser and Web server. First, there's usually a lock icon in the browser interface. Second, encrypted pages have "https" at the beginning of the URL, rather than the usual "http".

To process encrypted pages, you'll need a Web server certificate issued by a recognized certificate authority. In theory, you could a get a free certificate from various sites around the Internet. The problem with those certificates is that they're not recognized by popular Web browsers. Customers can manually add them, but that destroys your credibility.

To see the certificates recognized by Microsoft Internet Explorer 6, go to Tools menu, Options, Content tab, Certificates button. In Mozilla 1.6, go to Edit menu, Preferences, Privacy &Security, Certificates, Manage Certificates button.

The two-most commonly-accepted certificates are VeriSign and Thawte. Thawte charges $199 per year for a secure Web server certificate. VeriSign charges $349 per year. The difference? VeriSign has better name recognition because they've spent more on marketing. In fact, VeriSign owns Thawte. We've used Thawte certificates for three years and have never had a problem.

Certificate authorities do more than just take your money and email you a certificate. They contact you at your business phone and in your case at least sent a letter to which we had to respond. This address verification helps verify your identity and facilitate consumer trust.

The Credit Card Merchant Account

A credit card enables you to make payment with a credit card. A credit card merchant account enables to take payments from customers with credit cards.

Searching around the Web, many companies offer no startup fees, and monthly fees of $20 and up.

You'll also pay a small, fixed fee per transaction, plus a percentage of the sale. The transaction fee is usually 20 to 35 cents. (A few vendors I found don't have a fixed transaction fee.) This transaction fee explains why charging, say, five cents per page view doesn't work for credit cards: the overhead eats all of your profit. Apple sells songs on iTunes for 99 cents, but they pool all of your purchases together and charge your credit card infrequently to reduce overhead.

The credit card surcharge is anywhere from two to four percent for online transactions. (Fees are slightly lower for offline, card-present transactions.) Discover and American Express about 1% higher charge more than VISA and MasterCard. (Now you know how Discover pays its 1% cashback bonus, and how Amex pays for its rewards program.) You'll need to factor those percentages into your profit margins. The merchant account will eventually lower your processing surcharge if you have high volume and a low charge-back rate.

If that's still too high

So there you go. $200 a year for a Thawte certificate and $20 a month overhead for the merchant account. That's an amount most businesses - even the mom and pop variety - can afford.

If that's still too much, you have other options, particularly if you're just getting started or operating a hobby. PayPal works well, and the premium version lets you take credit cards in addition to PayPal. They also offer a simple Shopping Cart service.

Les Jones is an e-commerce manager living in Knoxville, Tennessee. He offers consulting in Web design and site promotion, and programming in JavaScript, Web+ Markup Language, and the Web+Shop shopping cart system.

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