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Key Components
Setting up an online business requires gathering a number of tools —
in essence, building the technical infrastructure required to serve your
customers (and maintain your sanity).
Three of the truly critical tools you'll need are a merchant account, a
Web hosting provider, and an accounting package. Along with your core
e-commerce platform, these three key elements form your e-business's
basic foundation.
Setting up a Merchant Account
To accept online credit card payments from your customers, you must
have an Internet merchant account. You set up a merchant account with
what's called an acquiring institution, in other words a bank, or a
middleman company that works with a bank. This bank authorizes the
transaction — or declines it, if there's a problem with the shopper's
credit card — and deposits the money into the merchant's bank account.
Setting up a merchant account is far from hassle-free — in fact, it
requires serious shopping around at the many businesses that offer this
service, and at no small expense.
First, some jargon. As you shop around, realize that there's more than
one type of merchant account. Brick and mortar businesses use merchant
accounts that accept point of sale (POS) transactions, because the
customer is standing right there. In contrast, online businesses need a
merchant account that accepts transactions in which the customer isn't
present, or CNP (cardholder not present) transactions. This type of
merchant account is sometimes called a MOTO (mail order/telephone order)
merchant account.
Because there's a higher rate of fraud over
the Internet than at brick and mortar stores, the fees tend to be higher
for an Internet merchant account. Because of the higher fraud rates,
banks tend to be leery of Internet merchant accounts. Many banks won't
offer an Internet merchant account to a first time online entrepreneur.
Instead, plenty of new e-business owners get their merchant accounts
through an ISO, or Independent Service Organization.
These ISO's are middlemen who work with banks. The ISO's are more
tolerant of risk, and are geared for working with the transient
population of Internet business owners. However, since the ISO's are
taking more risk, their fees are also higher.
You can tell a bank from an ISO by its URL. Banks have URLs like
WellKnownBank.com. But ISO's have URLs like
Rock-Bottom-Rate-A1-MakeAFastBuck.com. (Actually, that's not fair to
ISO's — there are plenty of reputable ones.)
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Page 12
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Online Money-Making Opportunities
Several Systems to make real money via
Internet
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