| eCommerce, Part 6: Basic CyberCash
Considerations by Crimson Star |
The popularity of on-line shopping has recently increased beyond even the wildest projections. There are now a variety of companies competing for your credit card processing business. Competition lowers costs and often forces vendors to provide better service. The Problem Most credit card services are provided by banks. You open a merchant account with your bank, then process manual transactions by directly depositing the sales slips at your bank. (This procedure was explained in my previous article.) You can process credit cards electronically by leasing or purchasing a "terminal reader" from your bank. You "swipe" the customer's card through the terminal reader, which reads the magnetic stripe and sends the information off for processing. The problem is that banks do not want every Tom, Dick and Harriet in the country dialing into their computer systems. It would create a giant security risk and slow down their bank network. Instead, your bank issues you a Terminal ID and turns you over to their authorized "credit card processor" or "service bureau." What is a Credit Card Processor? The credit card processor is a company that maintains a large network of computers running credit card processing software that they have created. Your terminal dials into their system and presents your Terminal ID and the credit card transaction information. They identify your account from the ID, then process the credit card transaction. The credit card processor only accepts requests formatted as Point-of-Sale (POS) transactions. This is the format used by your terminal reader, or actual POS device if you use one. How can a Web site gain entry to this system? The Virtual POS Companies such as CyberCash, Inc. provide a service that accepts credit card data from your Web site, formats it to look like POS data, then sends it to your credit card processor for the actual processing. CyberCash was one of the first to offer this service. Their Web site provides complete details, ranging from simple overviews to detailed technical instructions. Let's look at the most important issues. CyberCash There are three parts to the CyberCash system. First, you run the "Merchant Connection Kit" (MCK) on your Web site. This is a small program that takes the credit card information from your shopping cart and sends it to CyberCash. Next, the CyberCash Cash Register program, running on a network of computers operated by CyberCash, receives your transaction and processes it. This is a two-step operation. It is formatted to look like a POS transaction and sent to your credit card processor. The results are returned to you. In addition, a copy is kept on the CyberCash system for your future use, if required. Finally, CyberCash also provides the CyberCash Administration Interface. This software also runs on the CyberCash computers. You may dial into it via the Internet and perform manual transaction processing. For example, a Web site customer might call you to place an order rather than use your shopping cart. You must use this software to process refunds or adjustments. The Good News The CyberCash MCK is free. Your Web hosting service provider must download it and install it for you on their Web server. You must register with CyberCash to use their system, but there is no registration fee or periodic charge. CyberCash does charge your credit card processor on a per transaction basis. The Bad News Your Web hosting service provider will charge you a setup and installation fee, typically about $300. Your credit card processor will hit you with a bewildering array of fees. Make sure you nail down all of their possible costs before you sign on the dotted line. Your shopping cart must "talk to" the MCK. This might be simple enough if you have a commercial shopping cart that contains built-in CyberCash connections. If not, you must hire a consultant to modify your shopping cart. The most important point is that the CyberCash system requires a customer orders database at your Web site. Most free or cheap shopping carts do not have this, or else theirs won't work with CyberCash. CyberCash recommends that you hire a CyberCash Merchant Development Partner to integrate your system with theirs to achieve maximum security and effectiveness. Expect to pay a minimum of $1000 for this service. Is it worth it? People will not make on-line purchases unless they feel the process is safe. Business clients are no exception. CyberCash is recognized as the market leader throughout the world. Their logo on your Web site shows your clients that you are serious and that you deal with professionals. Consider the setup and development fees as marketing expenses, then decide if it is worth it for your business. Can't afford to go with CyberCash or a similar company at this point? Don't despair. Next month we will review some alternatives.
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