SECURE TRANSACTIONS

Shopping Online is all about convenience, if your web site is going to sell, then when it comes to the actual purchase your customers will want to buy then and there. An easy way to give your customers that convenience is to offer secure credit card transactions online.

This article is a simple explanation of how to set up for secure credit card transactions on your web site. 

Internet Merchant Accounts

To allow customers to buy online at your web site with secure credit card transactions you need to set up a Internet Merchant Account with a financial institution that is capable of accepting credit card payments via the Internet. 

Unfortunately most Australian Banks consider an Internet business to be a high risk when it comes to credit card fraud.. This is because the merchant does not actually see either the customer or the credit card. This high risk factor has hindered most Australian banks from offering Internet Merchant Accounts and the type of credit card processing necessary for payments to be made to an Internet store.

See the list of Australian Financial Institutions that do provide these services.

When you have established an Internet Merchant Account, the credit card company (Visa, Mastercard etc) deposits the payments from transactions on your web site into your merchant account. The financial institution then periodically transfers the money electronically from your merchant account into your business account.

Your financial institution that holds the Internet Merchant Account will send you a monthly statement just like the one you get from your business account. It will contain a record of all deposits, fees that have been taken out, and the number and amounts of electronic transfers made to your regular business account. You will be able to match that information with the statement from your regular business account to balance your monthly statements etc.

Merchant rates are fees you pay to the bank and credit card company for using their services. Merchant rates for Internet merchant accounts are generally higher than they are for a regular merchant account because of the risk factor. There are also per-transaction fees.

You will find a summary of the fees and charges etc in the Australian Financial Institutions that offer Internet Merchant Accounts bit.

Secure Processing

Once you have set up your Internet Merchant Account you can begin to offer credit card transactions via your web site....but adding security and 'real time' confirmation that you have received their payment will speak credibility to your customers... 

Processing secure credit card transactions in 'real time' simply means that the transaction takes place immediately, just like it would in a physical store. But it's faster because your customer doesn't have to wait in line. Several customers can check out of your online store at the same time. Wow....what convenience huh?

For a transaction to be secure, it must be transmitted electronically from your site in some form of encryption. The most common form is SSL (secured sockets layer). There are different levels of SSL, ranging from 40 to 128 bits. The type of encryption, e.g., 128-bit, is determined by the algorithm that is used. Of course the more bits the more cost also...

SSL provides three important things: privacy, authentication and message integrity. In an SSL connection, each side of the connection must have a security certificate, which each side's software sends to the other. Each side encrypts what it sends, using information from both its own and the other side's security certificate.

This ensures that only the intended recipient can decrypt the information, and that the information came from the place it claimed to have come from. It also ensures that the message has not been tampered with.

There are some further advances that let you verify that the person at the other end of the transaction is who they say they are. This is called Personal Key Infrastructure and will be the subject of another article. 

Another form of fraud protection, which is not yet available in Australia is AVS. (address verification system) This verifies that the information provided by the customer matches the information the credit card company has on file for the credit card number. AVS can greatly reduce your chances of accepting lost, stolen or fraudulent credit cards, and thus can reduce the number of your chargebacks. Australian Financial Institutions have been slow to run with this one because it moves the onus of credit card fraud from the Merchant (You) to the Bank....really I don't believe a bank would do that?

Australian Financial Institutions offering Internet Merchant Accounts

IBS queried some Australian Internet active Financial Institutions: Westpac, Commonwealth Bank, ANZ, Suncorp Metway, St George and National Australia Bank on Internet Merchant Accounts. 

TO SEE THE RESULTS CLICK HERE

Techy Terms:

encryption - As more and more account numbers, credit cards, and personal information begins streaming through the web, it becomes ever more important to adopt some form of data protection.

The most common form of data protection is encryption. An encrypted transmission is a transmission that contains plain text data which has been mathematically altered so as to be unreadable, but which can be transformed back to the original by a reverse mathematical algorithm.

Consider the simple encryption algorithm used in Arthur C. Clarke's 2001 of letter = letter + 1 in which HAL is turned into IBM. Notice that H + 1 = I, A + 1 = B and L + 1 = M

Of course modern cryptographic algorithms are MUCH more complex and hard to solve backwards.

Chargebacks -  occur when a processing bank is forced to reverse a merchant sale because the cardholder's bank disputes the sale. In this case, the merchant has the opportunity to appeal and prove that the sale is valid.