RECAP: Introduction to E-Commerce

If you wanted to attend our Introduction to E-Commerce event but couldn’t, don’t sweat it. Below is a short summary of the information that was covered, complete with Brad’s full slideshow presentation.

What is E-Commerce?

Electronic Commerce most commonly refers to websites that sell products or services (shippable, digital, or tangible) and collect payment online.

E-Commerce is made up of the following:

Payment processing
Website and Data Security
Web/Customer Analytics
Website Merchandising

The 3 Key Elements

Merchant Account

A special type of bank account that enables a business to accept credit and debit cards payments. They’re usually provided by your bank. It usually also integrates with a “payment processor” as an intermediary to payment gateway.

Example: PayPal, Google Checkout

Payment Gateway

The Internet equivalent of a Point of Sale (POS) credit card terminal, a payment gateway is an interface for getting an approval or rejection of a transaction by a “payment processor” and merchant account.

Shopping Cart

An online shopping cart is a digital version of a shopping cart or basket shoppers carry around a store with them. It is a piece of web-based software that manages all of the products in your store and helps you process and keep track of orders.

Cost and Pricing Models

E-Commerce sites come with a list of common costs:

Discount/Interchange Rate – A percentage of the transaction amount (1-6%) that is paid to the merchant account provider.
Per-Transaction Fee – $0.05 – $0.45 cents per transaction
Monthly Fees – Charged on gateways, merchant accounts, etc. Varies by the integration method used.
Chargeback Fee – If a customer disputes a charge with his/her credit card company. ($20)
Application Fee – Usually charged for a merchant account. The fee can range from $49-300.