E-commerce: Turn Plastic Money Real
You might think it's a simple process to start accepting credit cards for your e-store. All you need to do is sign up for a merchant account with your local bank and the money starts pouring in. In no time at all, you can be relaxing on a Caribbean beach, sipping piña coladas worry-free, right? I hate to spoil your dreams, but accepting online credit card payments is quite challenging. Whether it's the transaction fees surrounding special cash-back credit cards or complying with a myriad of global sales tax laws, a lot of time and energy goes into setting up a full-featured shopping cart for your customers.
If you are going to implement credit cards on your own, it's important to understand the challenges involved. So we've identified seven challenges in accepting credit card payments that impact not only e-commerce, but also other departments of a business. Because these challenges are spread throughout an entire organization, it's best to be aware of what they are and whom they affect.
Challenge No. 1: Specialty Card Fees
Do you want to offer your customers the cashback Discover card? What about the MileagePlus Visa? Banks issue these cards to entice customers to use them wherever they shop, but merchants must understand that processing fees for these cards are typically higher than fees for other cards. In some cases, an additional 1 percent is charged to the merchant when a specialty card is used. From an accounting perspective, it is difficult to estimate the per unit sale costs when there are thousands of different fees for different types of cards. Therefore, it's important for e-commerce companies to meet with their accounting teams before accepting a new payment method.
Challenge No. 2: Regional Sales Tax
Do you understand value-added tax (VAT) rules in the U.K.? What about South Korea's online tax? As your e-commerce infrastructure becomes more complex—with servers and payment contracts in many countries, and overseas entities with foreign workers—your sales tax liability grows exponentially.