Are you Processing Credit Cards Online $? This article is for you!
Many Israelis buy online on foreign (non-Israeli) websites. Many Israeli businesses have joined this trend and have started selling to customers, around the world, online. For many of these businesses, however, this practice is intimidating. The question then becomes one of how to help them overcome the intimidation and difficulties….
Many companies in Israel are not selling online as yet because the risks stop them: how will I know the customer is real? how to collect the funds? how will I charge my customers? and what should I do to collect the money?
In addition, the infrastructure is not logistically clear, especially when it comes to deliveries. Having said that, the potential of selling online is quite immense. The e-commerce sales keep increasing every year and the forecast of the following years is one of a 10% sales increase per year.
Working in e-commerce significantly increases your market share whether you are a start-up or a stabilized company. The challenges in marketing your services exist in a few forms: operational, financial, customer experience and technological.
What are the steps for operating in the global online market?
Target Market: decide what your first target market is - US, EU, LATAM…Best to start with one main market with similar characteristics in order to gain knowledge & experience.
Payment Methods: perform market research in order to verify the most preferable payment methods in each country targeted. Credit cards are not the leading payment option in all countries of the world. In Russia, the e-wallets are dominant as are the prepaid cards and direct debit solutions in Europe. If your products are designed for a specific target market; you must take into account age and gender, as well as a check of the products they like to purchase and their preferred method of payment. There are many technological solutions that were developed in different countries in order to ease the payment processing, such as “Stripe” in the US. You must be familiar with these as well.
Technical Implementation: at this stage you will need to connect with a Bank through a payment gateway. The gateway will accept the money on your behalf from the customers’ bank. There are companies called iPSP (Internet processing Service provider) that offer these services and function as a channel to the banks. This company will be your “technological partner” and will help you with all issues of payment processing and risk management that will be discussed below.
Payment Page: most of the payment gateways will offer you use of their “payment page” which is safe & secure according to PCI DSS standards. Embrace this option as a first stage and check how to customize this page for your needs instead of investing in building your own payment page and securing it according to the PCI. Building your own payment page takes time, resources and budgeting for security tools.
Communication with the Banks: The application process with the bank will include: filling in information, presenting company documents, and detailed information about your company. The bank will decide, based on all information, whether to allow you to process or not. Assign one of the managers in the company to be responsible for the communication with the payment gateways and the banks. The daily activity will show you, as you go along, the importance of this advice.
Risk Management: most important is the risk management processes for your company. Buying online is not like buying in a physical store, where the seller and the shopper meet face to face. Selling online is great, however, there are 2 main challenges: Fraud by customers and unhappy customers demanding their money back. In both cases, the transaction will be defined as “suspicious”. The money will be deducted from your merchant account and sent back to the customer and you will be liable; i.e. - a “chargeback”. Besides the financial damage, you should be aware that the bank does not like cancelled transactions. The bank may define your company as problematic, fine you and even close your processing account. What should be done? Implement tools and processes to track fraud and mitigate the risk. There are many fraud management systems and on–the–shelf tools. Learn them and customize for your needs.
Legal Aspects: for some cases, it is better to open a daughter company abroad to facilitate operating more easily. There are law firms who specialize in this field and can quickly do that for you. In other cases, mostly in Europe, you will be able to process with your current company.
PaymentsOp is a niche consulting company specializes in e-payments and risk management for e-commerce for all players in the payments arena: Acquirers, Payments Gateways, High risk merchants and startups.