Online checks vs. CC

[Dan Kaplan]

Hi,

I'm curious if anyone has any comments -- experience is a bonus ;)[nbsp][nbsp]but not necessary, even gut feelings as a potential consumer is just fine -- on the pros and cons of online checking systems vs. credit card merchant accounts?

One such system I have looked at is i-Check:

http://www.i-check.net/

This format seems more directed at the lower volume sales or variable fees-for-service types that could not afford a merchant account.[nbsp][nbsp]Has anyone used online checking?[nbsp][nbsp]How convenient is it?

Another question, are web-related merchant accounts inflated price-wise compared to non-web merchant accounts?[nbsp][nbsp]If so, how much.[nbsp][nbsp]For a business that does not require real time processing, is there any angle to take here?

Also, I ran across Beseen's "ButIt! Button" at:

http://buyit.beseen.com/

Seems to fall somewhere in between the check and cc systems.[nbsp][nbsp]Is this a viable option?

Thanks in advance for any help or input,
Dan

[Jason]

Hi Dan,

We've started doing what is known as "virtual checks" for our business. We don't use an internet service like icheck. There are, I am sure, reasons for going with a service like that, but we decided it was a heck of a lot easier and much less expensive to just pick up some checkwriting software (we use a program called Checknique - I don't recall the URL, but we found it through Dave Central (www.davecentral.com (http://www.davecentral.com)) so you can probably just search for Checknique and it'll come up there) for $40 and a box of blank checks ($19 at OfficeMax for 250 checks) and cut our own virtual checks. They work very well, our bank accepts them with no problems (although the bank will tell you you need special toner for it, in reality you probably don't - a little-known fact is that *all* laser printer toner is actually magnetic - the stuff the banks recommend is just a little more magnetic than standard, but standard toner will run through their machines without trouble 99% of the time (and the other 1% they just enter by hand).)

So unless you have a specific need for that "instant" check verification that a service like icheck provides, you can save yourself some money and just cut the checks yourself.

Good luck,

Jason

[elite]

Is this the program you use:
http://www.virtualbankchecks.com/

I tried to call nations bank to ask if I could use it and they diddnt have a clue what I was talking about (lol)

[Dan Kaplan]

Hi Jason,

Thanks for the advice.[nbsp][nbsp]Checknique looks quite promising.[nbsp][nbsp]The address was pretty easy to find:

http://www.pbdtech.com/ckmain.htm

The retail price for Checknique is $49.00. For a limited time, we are offering Checknique to all Internet users for the discounted price of $29.95.
Not bad at all.[nbsp][nbsp]They actually say that no special ink is needed, so it looks like it might be 99%+ ;)

I didn't see anything about it at Checknique, but VirtualBankChecks.com describes the process of having to get the check pre-authorized by the customer, either verbally (recorded) or in writing.[nbsp][nbsp]This makes it less convenient than just getting a regular ol' check from the customer, but it's probably more confidence inspiring from the customer's standpoint -- they get confirmation of payment.[nbsp][nbsp]The database and regualr payment aspects could be nice, too.

This is definitely worth taking a closer look at.[nbsp][nbsp]It doesn't answer all possibly concerns (what does?), but it's a very inexpensive option that might appeal to some customers.

Thanks,
Dan

[Rich]

...pros and cons of online checking systems vs. credit card... I'm not sure "check VS credit card" is the right question. If you are going to have a sucessful Internet business you MUST accept credit cards. CC transactions will make up 80-90% of your revenues with the rest coming from checks, fax, phone, etc.

are web-related merchant accounts inflated price-wise compared to non-web merchant accounts Yes, Internet merchant accounts carry higher transaction fees due to the increased risk from fraud. Rates typically range 1-2 percentage points above those of normal "brick and mortar" stores for LOW RISK businesses. For high-risk businesses, the skys the limit. For example, adult-oriented sites may pay as much as 5-10% or more per transaction.

For a business that does not require real time processing, is there any angle to take here? I have yet to see an Internet merchant that does NOT require real-time processing, although many do not think they do. :) If you do not use a payment service that provides real-time processing of the credit card, then you must ask yourself: (1) what are you going to do with the credit card information that the customer submits to you; and, (2) how are you going to protect the information from potential theft?

The only alternative to real-time processing is to implement a mechanism to encrypt the information and then process the credit card using some type of client software like PC or Mac Authorize. For the encryption, you'll either need to implement a shopping cart that includes it or implement your own payment forms/scripts that do. If you are interested in this approach, check out PGP Form Mail. Links are at:
http://www.aota.net/ubb/Forum16/HTML/000044-1.html

Rich

[Dan Kaplan]

Hi Rich,

Points well taken.[nbsp][nbsp]I wasn't meaning to compare online checks and credit cards directly, more to find out if the checking systems would work in certain situations.[nbsp][nbsp]My intent was to keep it from being a blatant ad for my business, but my questions might make more sense knowing that it is web design. :)

I don't see credit card payments making up a large portion of my "sales" because it's unlikely that too many people will be paying a set price (different package options, maintenance, etc.).[nbsp][nbsp]It seems impractical to try and automate such a system through online CC payment.

That's why I mentioned real-time processing.[nbsp][nbsp]As I understood it, this would be a better option for accepting credit cards and being able to enter in the dollar amount myself.

As far as the "virtual" vs. "brick" merchant accounts, couldn't a business such as mine be categorized either way?[nbsp][nbsp]I have a mailing address, business license...

I checked your PGP Form Mail thread just before starting this one.[nbsp][nbsp]It looks very interesting.[nbsp][nbsp]If I go that direction, I'll certainly give it a try.[nbsp][nbsp]Actually, I'll most likely try it regardless, on the off-chance it could be of use for someone else.

Any update on the teaser in one of the other threads about FQ and you offering some sort of shopping cart?

Thanks,
Dan

[Jason]

Hi Dan,

I didn't see anything about it at Checknique, but VirtualBankChecks.com describes the process of having to get the check pre-authorized by the customer, either verbally (recorded) or in writing.[nbsp][nbsp]
Yes, it's true you do need to get authorization from your customers. It can be recorded (which is a pain) or written (which is much easier) or via the Internet as well (you can actually see a sample of an Internet authorization at the Checknique site - if you elect to order the software using a check they bring you to their vcheck authorization form). Safest way is to get authorization via fax - and the safest way to do that is to get the customer to actually fill out one of their checks as if they were going to mail you the check, but have them fax it instead. Then you just cut an identical check off your check-writing software and deposit it. It's a little more work for the customer, but it saves them the envelope and 33 cent stamp, and it saves you the 3 to 4 days in-transit time while you wait for the postmaster to drop that envelope in your box. And if you get a toll-free fax number, it won't cost your customer anything to send you that authorization.

Good luck,

Jason

[Rich]

Is that true even if they merely advertise products on a web page but take phone orders for the actual sale (with the vast majority of sales being in-store CC swipes)? Usually (but not always), this answer is yes. However, it mostly depends on their acquiring bank. If they have discussed this with their bank and told them what they are doing then all is fine. If not, then they should do so immediately. The deciding factor will usually be the % of each type that is being conducted.

Is this considered a safe way of transferring credit card information? re: using fax for cc information
This is considered as safe as giving the information over the phone but I don't recommend it. Mostly, for the exact reasons you mentioned. I was referring to allowing them to complete an online form to give you the credit card information. Then, getting their signature on a document that describes what they have purchased. Some merchants even go as far as having the customer fax a copy of both sides of their credit card. How far you should go regarding these types of things really depends on your type of business and how much risk you can afford to take on. Just remember, that if you are selling a service (as opposed to a tangible commodity), then it will be very difficult, if not impossible, to prove delivery should a charge back occur. These extra documentation steps could definately help "win your case" when you receive a charge back notice and are asked to prove, without a doubt, that what was ordered was what was delivered, and that it was delivered to this exact customer and not somebody else, etc., etc.

Rich


[This message has been edited by Rich (edited 12-17-99)]

[Rich]

I don't see credit card payments making up a large portion of my "sales" because it's unlikely that too many people will be paying a set price (different package options, maintenance, etc.).[nbsp][nbsp]It seems impractical to try and automate such a system through online CC payment. I believe you will be surprised by the number of customers that will want to pay for your services by credit card if you offer this form of payment to them. I agree that the traditional means of collection may not be as practical for your type of business. For services such as website design, you will want to obtain from the customer a clear statement of what charges will be applied to their credit card, the terms of sale, and any refund policies. This can be easily accomplished by just letting the customer print the form and fax it to you. You will find this goes a LONG way to avoiding potential charge backs.

As far as the "virtual" vs. "brick" merchant accounts, couldn't a business such as mine be categorized either way?[nbsp][nbsp]I have a mailing address, business license...
Yes and no. :) You will not be able to use a "retail" merchant account for Internet transactions, but you most certainly can have BOTH a retail merchant account AND an Internet merchant account.

The key factor in determining the transaction rates paid is the percent of "swiped" transactions. Here, swiped means that the card is physically present and has been passed through (swiped) using a terminal like those used in retail stores. If you swipe over 70% of all your transactions, you will be able to qualify for the lower rates.

By the way, even established retail merchants that establish a Web presence are required to obtain a separate Internet merchant account.

This is VERY important to know if you are establishing Web sites for businesses that also have a retail business. A business risks having its retail merchant account terminated if it is used incorrectly for Internet sales. If this happens, it can be disasterous to the health of the entire business.

Hope this helps!

Rich


[This message has been edited by Rich (edited 12-17-99)]

[Dan Kaplan]

Jason and Rich,

Thanks guys, you've been very helpful.

If I'm going to be doing a lot of faxing (checks), I should probably look into a stan-alone fax...

By the way, even established retail merchants that establish a Web presence are required to obtain a separate Internet merchant account.
Uh-oh, I know someone that's not going to like to hear that.[nbsp][nbsp]:([nbsp][nbsp]Is that true even if they merely advertise products on a web page but take phone orders for the actual sale (with the vast majority of sales being in-store CC swipes)?

you will want to obtain from the customer a clear statement of what charges will be applied to their credit card, the terms of sale, and any refund policies. This can be easily accomplished by just letting the customer print the form and fax it to you.
Is this considered a safe way of transferring credit card information?[nbsp][nbsp]I suppose it's as safe as snail mail, but with faxing there's always the uncertainty of an exposed sheet sitting on someone's desk waiting to be delivered.[nbsp][nbsp]Would such a form include the standard info such as name, cc# and expiration, address, amount paid, and signature?[nbsp][nbsp]Or is there anything else needed to make it legit?

Thanks,
Dan

[Dan Kaplan]

I just found the following at ibill.com:

Online Checks can only be used for the sale of non-tangible items including services, content or subscriptions. However, the Online Checks system can also be used for recurring subscription memberships, such as monthly magazine subscription payments.
Doesn't sound like a problem in my case, but might be worth looking into for others.[nbsp][nbsp](Hosting is non-tangible, isn't it?)

Dan

[Cheryl]

Dan,

It's been a while since you posted your question regarding accepting checks online, but in case you need some more input. . .

Like Jason, I also accept checks for payment, using a check printing program to print them myself, and it has worked very well.[nbsp][nbsp]It also doesn't matter whether of not the product is a tangible item or a service.

Take a look at:[nbsp][nbsp]www.checkersoftware.com (http://www.checkersoftware.com)

*Cheryl*
[This message has been edited by Cheryl (edited 08-06-00@3:46 pm)]

[Dan Kaplan]

Hi Cheryl,

Thanks for passing that along; looks like a good one.[nbsp][nbsp]I haven't done anything with this since December...[nbsp][nbsp]Obviously, the need has been low.[nbsp][nbsp]It would be nice to get something set up, though.

Dan
[nbsp]- my stove has too many burners

[frankc]

Ohmy...4:51ET and DK is still posting.[nbsp][nbsp]Somebuddy gonna be grumpy today?[nbsp][nbsp];)

[nbsp][nbsp]Frank

[Dan Kaplan]

Heh, I was up long after that and I'm chipper as a bird this morning.[nbsp][nbsp]:)[nbsp][nbsp]It helps that I'm on the West Coast.[nbsp][nbsp]As they say, don't believe everything you read...

Sleep Dprived