Finished Business

by Charles Gajeway

Imagine how frustrated you’d be if one day you went to the grocery store, filled a cart with all your favorite snacks, and waited an eternity at the checkout counter, only to discover they couldn’t take your money.

This is precisely how many small online businesses treat their customers these days. While many Web sites feature product catalogs for customers to peruse, some require them to follow up with a phone call to complete a sale. Anyone can get an e-store up and running for a few hundred bucks, and many services now provide the technology to initiate and capture credit card transactions in a secure environment. But to complete the transaction, a company must also have a merchant services account with a bank or credit-card-processing specialist. This account allows money to transfer from a customer to a seller.

In the past, banks have required merchants to meet strict credit standards, and have worried about the potential for fraud in business transactions by mail, by phone, or over the Internet. Banks consider merchant accounts as a short-term line of credit that is paid off when your customers’ banks transfer funds to cover their purchases. The reluctance of many banks has often been reflected in tons of paperwork and weeks or even months of waiting for decisions that too often turned out to be negative.

Fortunately, the tradition of delays and denials in opening a merchant services account is changing in the face of increasing competition and improved technology. Many credit card processors are willing and eager to handle e-business.

The Easy Way
Several online service providers now take the Web hosting process one step further. These companies will either provide or arrange for merchant services, help you design the Web site, and host it. Rom Damiani, co-founder of, says that EarthLink’s Entrepreneur packages provided the impetus to open his business. “For a long time my partners and I had talked about opening a record company,” Damiani says. “Even though I had no real experience, it was no problem to get the store up and running in a day or so.”

The Web site has been operating for over a year and a half now, and Damiani is pleased with the results. He finds EarthLink’s administration tools easy to use and more than adequate to track and update his Web pages. “The merchant account application was straightforward and presented no problems for us,” Damiani says. “In operation, we’ve experienced no problems, and credit authorizations are fast and smooth.”

Business has been good, too. “Our direct-sales operation has made it possible to establish distribution of our products to regular outlets,” he says. “Our straightforward e-store is just as effective as flashy multimedia corporate sites, because it’s fast and easy for our customers to use.”

More and more, stores are looking to obtain credit-card services from the same people who provide Web design and hosting. Earthlink isn’t the only vendor that offers such a package. Bank of America’s eStores offering has been in operation for about a year, and serves over 1,000 merchants, roughly half of which are pure e-businesses. The program accommodates businesses at various stages of development, including both ground-level start-ups and existing e-commerce operations. The recognizable name of a financial institution, rather than a lesser-known dot-com, may inspire consumer confidence and increase buying rates.

But going with a less-well-known name does not always mean lesser results. offers its Web-based e-business solutions either as a package or a la carte. It claims a 99.9 percent approval rate because it can match merchants to any one of ten different credit-card-processing relationships. GoEMerchant Web sites are easily built via a simple question-and-answer process, and require absolutely no experience with HTML editing. The company also offers Cyber-Circular, a unique marketing program that includes a “Buy-Me Button” in promotional e-mails that lets recipients order on the spot without having to visit the Web site.

John Elison has been a GoEMerchant customer for about five years. Like his two brick-and-mortar stores, the Web store specializes in athletic shoes. “E-commerce is the fastest-growing part of my business,” Elison says. “They even helped me switch to a merchant service provider with lower rates that improved profits. If I had to do it over again, I’d have no problem staying with them.”

The Alternatives
If you already have a Web site up and running, CyberCash and’s PayPal Business can provide basic e-commerce capabilities. These firms offer some of the best-known payment systems, and name recognition is important to consumers wary of credit-card fraud. Merchants can apply for CyberCash’s Cash Register services on line. Approval rates are high, and can take place within two hours or less. All transactions take place in CyberCash servers, so all consumer info is secure. Transaction servers are maintained on a 24/7 basis, something most small businesses can’t afford. claims that its PayPal Business product is the largest Internet payment system, with more than 300,000 business accounts. PayPal does not require opening a merchant service account, yet transaction costs are on par with the average bank fee. Simple to incorporate into existing Web pages, PayPal can be an excellent choice for small-scale start-ups. By the time this article appears, PayPal is scheduled to include a shopping cart feature, making multiple purchases more user-friendly.

Verza Online Payment Solutions offers an entirely different approach that cuts out the need for a merchant service account. Merchants actually clear credit card transactions through Verza instead of a separate merchant account. This makes getting started much easier and faster. It’s also nicely suited for business who want to start slowly, or who have been turned down by vendors for merchant services.

Patricia Sbardella of, which sells various gift items, operates her Web site as an extension of her Vermont store and decided Verza was best for her business. “While they charge users more per transaction, I’m paying less than I did when I had separate shopping-cart and merchant services, and I didn’t have to make a long-term commitment.”

Canadian resident Bill Monk of also uses Verza and says that such services are useful for international business because they make coordinating communication between Canadian and U.S. banks unnecessary.

Hitting Pay Dirt
Online business is evolving rapidly. By the time you read this, new services will have emerged that make it even easier to accept credit cards on line. Before choosing a merchant service provider, review your business objectives and have a clear idea of what your needs are. Compare the pricing and features each service offers. Talk to the firms that interest you, and most importantly, look at their customers’ Web sites to see how they look and operate. Then you’ll be prepared to pick the one that most closely suits your needs and will get your e-business off on the right foot.

Small Business Computing Staff
Small Business Computing Staff
Small Business Computing addresses the technology needs of small businesses, which are defined as businesses with fewer than 500 employees and/or less than $7 million in annual sales.

Must Read

Get the Free Newsletter!

Subscribe to Daily Tech Insider for top news, trends, and analysis.