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What Is E-Commerce
Like your business in the real world, your virtual store on the web contains many elements that contribute to its success. In the real world, your business needs a property to house a store, shopping carts for the customers and, of course, a cash register.
When setting up your e-commerce store, you need many of the same elements: a server location for your online store; a way for customers to collect the items they wish to purchase; and the ability to take credit card payments over the Internet. As parts of an e-commerce website these are called:
- E-commerce web hosting service
- Shopping cart software
- Merchant account provider
When designing your site with a web design agency, you still have a lot of decisions to make about what you need from these elements so they work best for your site. The following articles will introduce you to web hosting services, shopping carts and merchant accounts, and should help you make more informed decisions when you are discussing your site with your developer.
How to find the best host
The web-hosting service you choose for your e-commerce site is just as important as the site itself. It acts like the building housing your business in the real world, and many of the same criteria for selecting a location apply: What kind of services does the building offer and how much will it let your business expand?
The shopping cart
Shopping carts are as essential in virtual stores as they are in real ones. In virtual stores, though, as customers click on items they wish to purchase, the shopping cart software keeps track of the items until the customer has everything they want. Then the software calculates and displays the final charge for the customer.
Credit card payment
If you take credit card payments through your business, you are probably already familiar with the idea of a merchant account -- the agreement you have with a credit card company to process payments made on credit cards. Being accepted for an on-line merchant account involves a more thorough check of your business and site to asses whether they are both secure.
Facts about accepting credit cards online
Before you can accept credit cards (either online or offline), you must have a ‘Merchant Account’, which is a special arrangement with a banking institution. Small and home businesses often experience difficulties qualifying for a merchant account, and web based businesses run into even more problems.
The situation is this: Online transactions don’t take place at the point of sale (POS). They are considered to be "non-face-to-face" transactions. Since there is no way of ascertaining the customer’s identification, there is no way to be sure that the customer is the legitimate card holder. Therefore, financial institutions are concerned about the high potential for fraud. Moreover, the major credit card companies offer their card holders the right to contest charges on their statements that may be the result of theft, fraud or error. A contested charge is referred to as a chargeback. When a chargeback occurs, merchant will end up paying the charge to the issuing bank, in addition to a chargeback fee that can be as high as £25 or more. For example, if you sell a book for £20 through a credit card transaction, and the cardholder later contests the sale, you will end up paying your bank the £20 plus a chargeback fee of £5 to £25 pounds.