When we speak with associations that have not done online transactions for their association on the web, we know we have a bit of a learning curve to deal with – particularly if it’s a smaller association that does not have a merchant account. So the point of this post is to cover that waterfront a bit as a reference.
First of all, in order to take transactions online, you’ll need at LEAST three items: a payment portal, and a payment gateway, and a payment processor. In some cases they can be the same company although they do different processes.
The payment portal is where the buyer puts in their appropriate information for purchase. This includes item, buyer information, and payment choice with appropriate codes and IDs. This should be a secure server, it can be a subscription “shopping cart” server service which provides for greater flexibility in providing inventory and customizing the purchasing process, or it can be hosted on the actual web site, as long as proper encryption security is used. The payment portal sends the transaction information in encrypted form to the payment gateway.
The payment gateway simply forwards the transaction information to the payment processor used by the merchant’s bank (i.e, your bank account).
The payment processor then coordinates with the appropriate credit card authority to allow for the transaction to be authorized or not. Authorization will allow for the payment to be deposited in the account you have set up for that purpose; if not authorized, it will send a response back the payment gateway with some details of the reason the transaction was declined, and the payment gateway should provide you detail as to what the issue is.
There’s a relatively clear explanation of the process on Wikipedia here:
for further detail.
So – an association that has not taken credit card transactions at all before needs a few things if they want to start taking them online.
First of all, you will need to set up a credit card merchant account with your financial institution IF you plan on taking ANY transactions offline (by mail, by phone, in person, etc.). And the kinds of transactions your association may take may still lock you into having a merchant account.
The financial institution will most likely also specify the requirement for the processor AND the gateway, and the payment for these services will be with them.
Fortunately this is evolving and the marketplace has non-bank-specific options available for processor and gateway, but your bank will STILL make the determination of what it will and will not allow to happen within their accounts.
As for the payment portal – where the customer/client/member actually enters their transaction information – there are LOTS of options. Associations ought to figure out a matrix of their online transactions to start: What are you selling, how often do you sell, what kind of data fields or flexible transactions will you need, etc. A lot of associations have just a couple of categories of online transactions:
and there are lots of options to take care of those two items, but if you have OTHER types of transactions that you want to do online, you need to map these out. There’s a wide variety of payment portal options out there, and associations have options with online association management software which provides such features as well. Knowing the types of transactions – and the way you wish to customize them – will help you determine the way to implement the payment portal.
Obviously, there are costs associated with merchant accounts and payment gateways and secure payment portals. Some associations use the non-monthly-fee version of Paypal, but I would caution that there’s a reason there is no monthly fee to this version, and that is that it may not be flexible enough or configurable enough for your needs. Free sounds good, but figure out your needs first, because function, not cost, should drive your choice.