How to get rich ! (Part 1)

We have found many companies who are put off selling on the web, thinking that it is too complicated and expensive to get started. This certainly used to be the case a year ago but is no longer so. Last month we mentioned that we would begin to describe setting up a complete e-commerce site using off-the shelf components to handle credit cards transactions all within a budget of £ 1000. In the first part of this series of articles we will deal with the items that you are going to need to get going. Lets us ignore the technology for a minute and concentrate on the financial arrangements that need to be put in place before you can handle Credit cards over the net.

Give us Credit

You, or rather your company will need to become a credit card merchant with cardholder not present status (as in mail order). On top of this you also have to apply to the Credit card Company to handle transactions over the Internet. This all seems complicated but it is not really. Lets take the simple route, you apply to Barclaycard for merchant status, don’t worry about handling other credit cards. If you are a merchant for say, Barclaycard (www.bms.barclays.co.uk), then you can take Visa Dalta, UK Electron, MasterCard, JCB, Switch and switch solo cards as well. It is only cards such as American Express and Diners Club that require a separate account to be set up, and for the majority of companies, the ability to handle Barclaycard and Mastercard is quite sufficient.

First Stop Barclaycard Merchant services

We decided to use Barclaycard as the credit card clearing house simply because they were one of the first in this country to embrace the Internet and have a great deal of experience in this field. To qualify for merchant status your company has to satisfy certain criteria, which are not too onerous, and should you be refused, there are other routes to handling credit cards over the net, which we will talk about in a while. So first you contact Barclaycard Merchant services (tel 0800 616161) and request an Internet Merchant Pack. When this arrives there are several forms that need to be filled in and returned along with a cheque for £ 125 as a one off registration fee. Read the documentation and these forms very carefully as you are agreeing to certain terms of trading, which should you break could mean you having your merchant status revoked. One of these terms regards delivery of goods, so before you start selling on the ‘net make sure that you can supply the demand and that you have contingency plans should the demand be greater than expected. One of the forms concerns your web server setup and this can be quite daunting as there are all sorts of questions abut security and encryption, but again there is an easy answer to this. When your company is accepted then an offer of commission rate will be made. This is the percentage that you will pay to the credit card company on every successful transaction, and is usually between 5% 1% typically 2.5%. This is negotiable at any time, obviously if you have some track record of trading then your case can be argued more forcibly than if you are a start up company. You will also receive the all-important Merchant number.

The Easy Way

Next you could go down the route of setting up a secure server and having all the worry of the keeping the level of security demanded by the credit card companies. Instead of this there is an easy solution and as we believe in easy solution where possible, this is what we chose. Firstly, you need to approach one of the many internet credit card handling companies, we have written about these companies before in issue 53. These companies will handle the processing and validation of the credit card details so that no where on your site will you have to worry about the security of credit card numbers. They will also check the available credit on the card, obtain authorization from the Credit Card company and inform you and the customer whether the transaction was successful. Now again all this costs but this is usually on a percentage of each transaction basis so the more you sell the more you pay.

Netbanx offer a wide range of services

For this job we chose Netbanx (www.netbanx.com), again because of their experience and track record along with their range of products. So after a brief ‘phone call yet more forms arrived. Again nothing too bad here, again some more questions about security and web server setup. However by using an off the shelf product such as I-cat or Actinic Catalog then most of these questions can be ignored. Making the process easier, also saving you money as Netbanx are doing special rates should you use one of the range of supported products rather that writing your own. When you send off these forms , with your money, in this case £151, after a few weeks you should get approval from Netbanx and an information pack and software which explains in more detail how to set your server up to link to their system. Despite rumors you do not need a Ltd company with 3 years accounts, the credit card houses are very flexible on their requirements. We even know of a company that had not trouble gaining merchant status even though the MD was a discharged bankrupt who can not get a personal Credit card! So don’t think that this route is not for you, it really is fairly painless. However if you can not get merchant status, or don’t wish to, as you are just selling a couple of items or ‘dabbling your toes’ then companies such as Netbanx offer a bureau service. With this service they handle the whole credit card transaction for you, including collecting the money from the credit card company. Obviously, for this they take a commission, which can be as high as 9% depending on the level of transactions, but of course you will not have to pay the credit card company’s commission as well. This arrangement suits many small companies but there is a small drawback to this arrangement. You will receive your money, less commission, 30 days after the end of the month of the transaction, so you could be waiting nearly 60 days for your money. Now this is not too bad if you are just selling a downloadable product, but if it is any thing that has to be produced or bought in, then this delay could cause cash flow problems for a small company so make sure that you make allowances for this in your business plan. You do of course have a business plan don't you ? Don’t even bother try selling over the Internet with out some sort of business plan, to make sure that the anticipated gains outweigh the guaranteed costs.

Now Catalogue it

Now you have the credit card financial side sorted out. But how are you going to implement this on the web? For this, we chose Actinic catalog (www.actinic.com) instead of writing our own code. We wanted to be up and running quickly and with this excellent product you can be up and running in half an hour! This is not an idle boast by a salesperson, we timed ourselves! Actinic’s catalog not only does the catalogue, shopping basket and order functionality, but goes the next stage and provides a mechanism for the company to handle, track and fulfill orders as well as a reporting tool that enables to see how quickly you are getting rich! All this for £ 350, at such a price it can be difficult to recommend writing your own code. The purest will argue on various points about this approach, but what we are trying to achieve is a quick and cost effective, yet versatile way of setting up shop on the web. Should your company grow into another Amazon then obviously the solution would change and develop accordingly. This product will work on any server that supports Pearl and so will work on NT and Unix/Linux web servers. In fact we will be setting this system up on a small Linux box just to keep costs down and to give a welcome break from Microsoft products. Should you not have your own web server then there are ISPs that will run the necessary server-side bits to run your Actinic Catalog. The setting up of your catalogue we will be covering next month.