How To Accept Credit Card Payments Online

January 20, 2022

The Bolt Team

Visual representation of accepting credit cards online

How do you accept credit cards online? How long does it take for a payment to process?

In this guide, we’ll walk you through the basics of how to accept online payments. We’ll also answer questions such as: 

  • How to set up your payment processing system
  • How long it takes to process credit card payments and receive your funds
  • How to actually process customer credit card payments online

Services like Bolt not only help you improve conversions with one-click checkout, it can also handle online payments. It includes PCI-compliant payment processing into a secure, enterprise-grade solution, so you can easily handle the explosive volumes predicted to come your way in the next five years.

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Selling online: stats you need to know

In the latter part of 2020, as a result of the COVID-19 pandemic, Visa reported that 82% of small and medium businesses changed the way they do business. 43% now sell their products online, compared to only 17% selling online before the pandemic.

At the same time, millennials and baby boomers are bullish on contactless payments. 80% of millenials and 75% of baby boomers prefer to tap their cell phone to pay at the counter. The goal for buyers today: to avoid touching anything when purchasing. 

This same goal has normalized online buying. According to the Washington Post, consumers aged 65+ are the fastest growing group of online shoppers. In 2020, they spent 49% more online than they did prior to the pandemic. And the frequency of purchases climbed more than 40%.

These stats demonstrate that buyers are making the transition to online shopping, which makes it imperative that you accept credit card payments online.

Challenges for business owners accepting online payments

Before we get into the how-tos, let’s explore merchants’ biggest concerns and challenges related to accepting online payments,   

Challenge #1: technology 

For all the labor-saving promises, technology is a pretty intimidating aspect of accepting online payments. According to VISA: 

“Just 12% of SMBs consider themselves ‘experts’ in technology and only another 29% say they are ‘proficient,’ leaving 59% who consider themselves less than proficient with new forms of technology.”

The thought of setting up API connections between a merchant account and a payment gateway is enough to give some people the hives.

Thankfully the online payment industry has come a long way. It’s now relatively easy to set up your payment processing system, even for people who consider themselves non-techy.

For example, with Bolt Payments you have an all-in-one payment solution that supports all major card brands. It offers simplified reporting, reconciliation, settlement, and fee structures.  

Third-party payment service providers, such as Stripe and Authorize.Net, provide additional vertical integration. And alternative payment providers, such as Apple Pay, Amazon Pay, and PayPal can get you started right away with no technical knowledge required.

Challenge #2: security 

With $20 billion of fraud losses in 2021, most of them in North America, business owners are skittish about security. And the quick transition to ecommerce by brick-and-mortar merchants hasn’t helped. Fraudsters have resorted to machine learning to challenge protection systems. 

VISA has reported that 69% of small business owners have encountered customer concerns regarding fraud. Allaying customer concerns has become a major priority.

Working with credit card processing providers that are PCI compliant can be a good way to prevent fraud. Created in 2006, the Payment Card Industry Data Security Standard (PCI DSS) is an information security standard for organizations that access, handle, process, or store credit card information. 

The organization was founded by American Express, Discover, JCB International, MasterCard, and Visa Inc. The PCI Standard is now industry-mandated and administered by the PCI SSC.

For a good primer on how to protect yourself from online fraud, read Bolt’s guide on the subject.

Challenge #3: fees

Another area of concern for business owners are the fees they must pay when setting up their merchant accounts and payment processing systems. Monthly merchant account fees can go as high as $25 a month, and payment gateway fees range from $10–25 a month. 

Add to that per-transaction fees, and the costs start to add up. However, payment service providers, such as Bolt, Stripe, and others, don’t charge upfront fees or monthly maintenance charges. Instead, they take a percentage of the transaction, so you only pay when you use the service.

Challenge #4: chargebacks

Customer returns and chargebacks are another concern for merchants. Similar to refunds, chargebacks are initiated when the customer registers a complaint with their bank or credit card. The funds are then forcibly taken from the retailer’s account by the bank.

Source: Bolt, Preventing and Handling Chargeback Disputes

We talk in depth about chargebacks in our eBook Preventing and Handling Chargeback Disputes: We recommend downloading the eBook and reading it thoroughly. It’s a valuable resource that may come in handy.

Challenge #5: funds availability

How long does it take for a payment to process? Merchants are understandably concerned about when the funds they collect via their credit card processing system will be deposited into their account. 

But there’s no set answer. It depends on the credit card issuer’s bank, your payment processing system, and the day of the week. Typically it can take from one to three business days for an online card payment to be deposited into your business bank account.

Source: The Balance, 2018

Why should you accept credit cards online?

Being able to accept credit cards is a prerequisite for having an ecommerce business (unless you ship everything COD, but who does that these days?). There are several benefits to working with a modern payment service provider.

One of the biggest benefits is the flexibility it gives you. For example, you can offer a simple credit card processing option. But you can also offer alternative payment solutions, like PayPal and Apple Pay. You can even offer to finance customers with Buy Now Pay later (BNPL) options such as AfterPay and Affirm.

Additionally, if you can offer one-click payments, you can remove the friction of traditional payment processing and ecommerce solutions. The is possible with providers like Bolt that aggregate hundreds of merchants to provide a seamless shopping experience. 

How to accept credit card payments online

First, let’s put your mind at ease: This doesn’t have to be complicated. Gone are the days when you needed developers to write API calls to your merchant accounts and payment gateways, and then integrate it into your ecommerce store.

Today things are simpler. Not click-of-a-button simpler, but orders-o- magnitude simpler than even ten years ago.

Merchant account, payment gateway, and payment service provider

The first decision you need to make is how you’ll set up your account. With a more traditional setup, you’ll use a merchant account coupled with a payment gateway. But you may prefer the all-in-one approach a payment service provider gives you. Let’s take a closer look at each.

What is a merchant account and a payment gateway?

A merchant account is a special bank account that enables merchants to process payments. Your payment gateway deposits the funds you’ve collected from your customers’ credit cards into the merchant account. 

A merchant account is different from a business bank account. It’s simply a holding place for deposits. The money you collect cannot be deposited directly into your business bank account because they need to be available to cover returns. 

Your payment gateway collects the payments from various transactions. Instead of depositing them one at a time, the gateway consolidates these payments into your merchant account as a single deposit into your business bank account.

That’s why it’s so difficult to definitively answer the question, How long does it take for a payment to process? It depends on how you’ve chosen to collect payments.

What is a payment service provider?

A payment service provider integrates all these functions into one stack or platform. Bolt acts as a payment service provider, as well as Stripe and Authorize.Net.

While payment service provider and merchant account sounds similar, they’re not. A merchant account issues you your own merchant ID (MID), and will charge you a yearly and monthly fee. A payment service provider combines multiple merchants into a single MID.

Should you choose a merchant account or payment service provider?

Your best option depends on your company’s sales volume as well as its technical capabilities. If you run a high-volume ecommerce business, it’s probably best to open your own merchant account, as the overall fee structure can be slightly less at higher volumes.

However, a payment service provider can save you a lot of headaches. Here are some of the advantages of working with a payment service provider:

  • Price: It costs less to set up than a merchant account does. There are no up-front fees and no monthly fees.
  • Integrated tools: It includes additional features that you’d ordinarily have to get through other tools. Think invoicing, reporting, and loyalty programs.
  • Get started immediately: Payment service providers are easier to set up than merchant accounts, which can take weeks of paperwork and approvals.
  • No minimum transaction amounts: Merchant accounts often require a minimum monthly volume, whereas payment service providers don’t.
  • International payments: Instead of opening up multiple merchant accounts in all the countries you do business in, payment service providers typically work with multiple currencies. That makes it easy to accept international payments.

Integrating your payment service provider with your online store

Your next step is integrating your payment service so that it works seamlessly with your online store. Ideally, you want to be able to give your customers multiple payment options. Lack of payment options is a big contributor to cart abandonment. 

Working with a third-party payment service provider

If you’ve decided to use a third-party payment provider, such as Stripe or Authorize.Net, they likely have integrations with these and other popular payment processors. 

For example, if you’re using Bolt as your ecommerce platform and Stripe as your payment processor, here’s how you’ll set up the integration: 

  1. Go to your Bolt dashboard. 
  2. Navigate to Settings > LinkStripe. 
  3. Log into Stripe.
  4. You’ll be prompted to approve Bolt’s connection request by selecting the Connect my Stripe account button.

Working with alternative payment options

It’s also important to set up alternative payment options (APMs), such as PayPal and Apple Pay. In this visual guide, Bolt says accepting APMs can increase your average order size. 

Many shoppers prefer using these alternatives. If a credit card expires or they want to add a new payment method, they will just update their APM and it will always work.

The bottom line

According to Shopify’s The Future of Ecommerce in 2021 report, online sales account for 16.4% of global sales. Even more significant, 84% of consumers started shopping online during the pandemic. 

As Glossy Editor-in-Chief Jill Manoff said:

“If you’re waiting for this to end, you say we’re gonna be back to normal in two months, that we’re just biding our time and getting through it, then you’re gonna be screwed.”

The move to almost universal acceptance of credit cards is upon us. You can’t walk down the street today without passing by a pizza joint or a bar that won’t accept cash anymore. 

Generation Z (also known as zoomers) actually prefer non-cash alternatives. They look for touchless and mobile payment methods, even in brick-and-mortar stores. As they gain buying power, they’ll accelerate the migration to universal credit card use.

But you don’t have to figure this all out on your own. Companies like Bolt have integrated shopping cart technology and PCI-compliant payment processing into a secure, enterprise-grade solution, so you can easily handle the explosive volumes predicted to come your way in the next five years.

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ThinkShop by Bolt does not constitute professional tax or financial advice. Contact your own tax or financial professional to discuss your situation.