If you are running an online business, one of your basic requirements is a merchant account that enables you to accept credit card payments online. In this day and age, as the Internet grows into the world�s largest marketplace bar none, it is virtually unthinkable to run an online business without credit card processing facilities. And despite all the stories of credit card fraud on the Net, the credit card remains the most popular mode of payment online, largely because of the immediacy and ease of the monetary transaction.

Most small businesses can accept credit card payments through third-party processors, though the service is not cheap. However, it is a worthwhile investment given the fact that a business might lose customers who are put off by the prospect of having to make check or cash payments. �When I scouted around for third party credit card processors, I discovered that apart from a monthly processing fee of around $20, I would have to pay about $200 for my account, which wasn�t very high-volume at all � I only made about 800 monthly transactions,� says Tim Hansen, whose online aromatherapy products business depends on a fixed and loyal clientele.

However, given the business� obvious need to grow, Tim soon found that the COD (cash on delivery) method that he followed was putting him at a disadvantage when it came to making repeat sales. �Most of my customers who really liked my products nevertheless complained that COD was too outdated a method of doing business. In the end, I signed up with a third party to process credit card transactions, and I have to say it is money well spent,� Tim says.

Most of these third party processors will handle the entire processing. Among the credit card processors that small business owners can turn to are banks, which are obviously the most dependable, but there are also dedicated third party business credit card processing companies, and financial service providers. In any case, before setting up an agreement with any such third party, an entrepreneur should review the cost and customer service policy of the credit card processor.

For those entrepreneurs who do business using their own websites, it is mandatory to have secure and encrypted connections for safe credit card processing. Ramona Lockwood, who operates an online store selling imported lingerie, found that out the hard way after a customer charged her with causing a credit card scam. �He said his account had been hacked into through my site because this was the only place on the Internet where he had posted his credit card details,� she recalls. Though the matter was amicably settled, a shaken Ramona invested in fraud prevention tools to prevent repeats of the incident. �Any online business survives on the strength of the measures it takes to safeguard customers� credit card details,� she believes.

And it isn�t just the customers. Even the merchant account provider that you sign up with will almost certainly require proof that you know your business and can identify possible risk areas, and you know how to check for and prevent credit card fraud. Thankfully, the tools to do so are readily available.

Also readily available are credit card processing companies, mainly because given the fierce competition, chances are that such a company will contact you with an offer to sign up. �This is particularly true if yours is a new business,� says Tim. �The chances of signing up with an exploitative merchant account provider are high, so I would advise caution.� A reasonably secure way to locate a credit card processing company is to contact other businesses that accept online credit card payments.

Before signing on with a third party processor, make sure you ask the right questions. Gain detailed knowledge of fees, rates, processing speed, and other services that rival companies offer. Do not go for a company that charges you a too high fee to set up a merchant account and open a payment gateway. Also make sure that your account does not take forever to set up, because you are losing business meanwhile. Customer service should be available 24 hours a day, seven days a week, and promptly address your concerns. And finally, it is preferable to have a variety of point of sale (POS) options and swipers. Only when all of this is decided can you choose your credit card processing company.

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