“Adapt or perish” is an admonition that all businesses—big, medium, and small—must take to heart. As technology evolves and is integrated into e-commerce platforms, small companies such as yourselves must keep up or risk falling out of step with current market trends (and losing customers in the process). As it is, SMBs have to carve out and cultivate a distinct niche for themselves in today’s marketplace. Successfully—but discriminately—adopting novel business practices can contribute to a company’s on-going relevance.
One such technological ‘novelty’, if you will, is a virtual credit card processing terminal or gateway. Enabling online transactions, while keeping other payment options open to clients and customers can go a long way in helping your SMB succeed in India’s competitive retail space.
There are a number of key stakeholders who are responsible for a functional e-commerce gateway. Apart from you—the online merchant—and the customer and her credit card they are:
- The financial institution that issued the credit card (issuing bank)
- The card payment brand (brands like Visa, which actually produce the cards and the payment technology that helps them operate)
- The merchant bank (the bank at which you, the merchant, open up an account). Some payment processing services eliminate the need for merchant banks (see in next section)
- Processors (third parties that the merchant banks partner with to set up and manage merchant accounts)
Now that you know who the participants are, let’s take a look at the process itself and what you’ll need to accomplish at your end to set up a gateway.
Familiarise yourself with the costs
Utilising a credit card gateway involves fees at various points of the transaction. Your merchant account and service provider will command a portion of your earnings in the form of interest, and this is something you will have to consider when pricing your goods.
Set up a merchant bank account
You should be able to do this through your bank. You might also need to do some comparison-shopping to see which merchant bank offers you the best services. You could also just skip this step, and allow the company that processes your payments to find one for you.
Find a gateway or payment processing service provider
Some well-known online providers include Authorise.Net and Flagship Merchant Services. Once you’ve contacted them—and if you haven’t done this already—they will set you up with a merchant bank best suited to your business needs.
Acquire payment devices in case of physical POSs
If you plan to have a physical point of sale (POS) at the actual storefront, you might consider buying a card-reading device. As mentioned above, there are a number of options for SMEs these days when it comes to devices on which to process credit card payments. Some payment processing services can even help you circumvent merchant banks.
This should come as welcome news, since such services eliminate the paperwork and credit checks involved in setting up a merchant account. Square, one such service provider, comes highly recommended. It is a device that you can hook up to a mobile phone or tablet and is very simple to use.
Equipping yourself with credit card payment gateways is an important way to reach out to young, upwardly mobile customers, who might otherwise refuse to do business with you just because of this small inconvenience.