When planning an e-commerce site, it is important to plan ahead of time how you will accept payments.  One popular option for taking payments is by accepting and processing credit cards in real time on your website.  The advantage of processing cards in real time allows you to receive immediate payment for the sale instantly, allowing you to warn a customer if their credit card number was entered incorrectly or was declined, and makes your site more secure as you won't need to store a copy of the customer's credit card number on your website.

There are a two major components to accepting credit cards on your website:

1. The Merchant Account
2. The Payment Gateway.

The merchant account is a type of bank account that allows you to accept credit and debit cards from customers.  There are hundreds, maybe thousands of institutions that offer merchant accounts.  The largest merchant account companies are First Data, and Chase Paymentech. Many smaller companies are affiliates to the larger companies (e.g. PayPal is an affiliate of First Data).  Successfully opening a merchant account means that you when you process a credit card (whether through a terminal, online, or through a gateway), those funds will be deposited in your bank account.  Velocity Webworks has a good article on how to choose a good merchant account provider.

A payment gateway acts as an interface between your website and your merchant account.  If you want to process credit cards in real time on your website, you will need to sign up with a payment gateway provider.  A payment gateway provider will ask for your merchant account details and provide special codes for you to program into your website.  When the proper codes are in place, the gateway acts as a conduit between your site and your merchant account.

There are hundreds of companies offering gateways.  You may find some merchant account companies that have developed their own gateway.  The most popular gateways are Authorize.Net and PayPal Payments Pro.  There are others, such as TrustCommerce, Cybersource, and Global Gateway.

Here are some things to consider when choosing a payment gateway:

• Are they compatible with my shopping cart system?  No single shopping cart system supports the hundreds of different gateway services available.  Choose a gateway for which your shopping cart already has programming in place.  From my experience, the most widely-supported gateways are Authorize.Net and PayPal Payments Pro.
• What are their monthly fees?  When I began my first e-commerce site, I signed up for my account directly from Authorize.Net.  They charged $20 per month plus a fifteen cent per transaction fee.  Later, I signed up to be an Authorize.Net reseller to assist my clients.  The fees they would offer my clients as $17 per month, which is less than what I was paying!  I learned that sometimes you pay the highest fees when going direct to the company rather than buying from a reseller, because the company doesn't want to be seen as a competitor to their resellers.
• Do they offer a web interface to view my account?  It's very helpful to be able to log in and see what transactions have taken place.  It's also useful if the gateway's web interface allows you as the store owner to issue refunds or void transactions as necessary without needing to look up the customer's name and asking for their credit card number again.  Many web interfaces include a "virtual terminal" allowing you to type in and accept credit card payments over the phone or by fax without needing to buy an expensive terminal to sit on your desk.

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