Joel Liu's personal annotations on this page
Joel bookmarked
on 2008-09-07
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Today’s moving parts
Ok, so how do we do all this? First off, we have a merchant account. A merchant account is needed to accept credit cards. Every business that accepts credit cards needs to have a merchant account. We’ve used a few companies in the past, but currently we’re using an account provided by Chase bank. You should basically look for a reputable company you can trust that has good rates. The rates may not make all that much difference early on, but once your daily volume picks up a few basis points can make a big difference on your bottom line. But at first I’d pick trust over rates. You can always negotiate for better rates down the road.
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Next we have an account with Authorize.net. Authorize.net is the gateway that our systems talk to. They take the credit card charge information from us, process the charge, and then deposit the money into our merchant account. If the charge doesn’t go through they send us a denial code which we then wordsmith and present to our customer.
The engine to process the recurring monthly charges is something we built custom. If you use Rails, Active Merchant would give you a good place to start. We don’t use Active Merchant because we built our stuff before AM was released, but it’s definitely a nice library.
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We’ve also recently started a major conversion of our internal systems to a centralized billing system. In the past each product had its own internal billing engine. Today we’re centralizing this. We’re essentially building an internal web service that our other products can talk to when they need to charge a card. They ping the service with the details and the central system takes care of the rest. This is much cleaner and much easier to maintain since we only have to deal with processing in one place. Other benefits will come from this centralization down the road.
This link has been bookmarked by 22 people . It was first bookmarked on 02 Jan 2008, by someone privately.
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Felipe LavínSo, credit card processing and set up and all that stuff is a real pain in the ass. It’s definitely intimidating to get started. The industry just feels dirty. So many companies offering merchant accounts, so many companies providing gateway software and
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a aPayPal
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Today’s moving parts
Ok, so how do we do all this? First off, we have a merchant account. A merchant account is needed to accept credit cards. Every business that accepts credit cards needs to have a merchant account. We’ve used a few companies in the past, but currently we’re using an account provided by Chase bank. You should basically look for a reputable company you can trust that has good rates. The rates may not make all that much difference early on, but once your daily volume picks up a few basis points can make a big difference on your bottom line. But at first I’d pick trust over rates. You can always negotiate for better rates down the road.
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Next we have an account with Authorize.net. Authorize.net is the gateway that our systems talk to. They take the credit card charge information from us, process the charge, and then deposit the money into our merchant account. If the charge doesn’t go through they send us a denial code which we then wordsmith and present to our customer.
The engine to process the recurring monthly charges is something we built custom. If you use Rails, Active Merchant would give you a good place to start. We don’t use Active Merchant because we built our stuff before AM was released, but it’s definitely a nice library.
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So we had to rejigger our entire business model. Instead of billing annually we had to switch to billing monthly. It turned out to be considerably more lucrative for us, and considerably more comfortable for our customers too. More revenue for us, lower cost of entry our customers. Instead of having to pony up $99 up front, they could pay $12/month for as long as they wanted. No contracts, no lock-in, no big initial investment on their part.
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Every business that accepts credit cards needs to have a merchant account. We’ve used a few companies in the past, but currently we’re using an account provided by Chase bank.
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