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Street Smarts:
Internet ... or Internot?

By Ed Freedman

Internet or Internot? In our quest to learn a new product offering this year, let's answer the question. My response: definitely Internet.

Consider the stats: Forrester Research predicts that in 2004 North America will realize $3.5 trillion in e-commerce transactions, Europe will see $1.5 trillion and Asia can expect $1.6 trillion. That's a lot of Internet!

According to VeriSign, more than 60% of U.S. households are online and more than half of these households shop from home on a weekly basis. In fact, according to research company Ipsos-Reid, of the 100 million Americans who use the Internet, half of them will spend at least $500 shopping online this year.

Online stores allow merchants to remain open for business 24 hours a day, seven days a week. Not only is this an important convenience for customers, it also means more revenue for merchants. Online store overhead is also reduced since staffing isn't required to complete a sale. With the right payment processing tools, transactional functions are all done automatically.

If your merchants are not selling their products and services online, they are missing a significant revenue opportunity and so are you. With advances in technology, selling online has never been easier, safer or more cost-effective.

A secure, online store enables merchants to reach new markets across the country and even outside the United States. It is no longer an option for a successful business; it's a critical step in managing and growing that business.

The key elements of merchants selling online are accepting payments from customers for a single transaction (i.e. the purchase of an item from the merchant's Web site) or for a series of transactions (i.e. the payment of membership fees or installment payments via the merchant's Web site).

Online payment processing offers customers the convenience of submitting their credit cards or other forms of payment on the Web site-and merchants receive money from the transactions. Recurring payment processing allows merchants to set up regularly scheduled payments for their customers for a series of transactions.

Online payment processing requires coordinating the flow of transactions among a complex network of financial institutions and processors. Fortunately, technology has simplified this process, and with the right solution, payment processing is easy, secure and seamless for both the merchant and the customer.

If you're wondering what you need to do to get started as an e-commerce consultant, the answer is simple-get educated! You need to learn how it all works before you start selling e-commerce solutions. Every merchant that wants to accept and process payments on the Internet must have the following:

  • An Internet merchant account (an account approved for specifically processing 'card not present' sales, i.e. MOTO transactions)
  • A virtual terminal (performs all functions of a physical terminal, accessed over the Internet through a secure Web page interface)
  • A certified Internet payment gateway (a virtual terminal feature that moves credit card processing information from the virtual terminal to the processor and returns approvals in real time in a secure environment)
Internet payment gateways are a necessary part of e-commerce. Without a gateway, credit card processors will not allow merchants to access their systems through the Internet because of security issues. Credit card processors only permit companies that have certified their software to access their systems. In this way, processors are able to make sure only a few certified and trusted companies have access to their systems-thus reducing fraud.

Virtual terminals perform all the same functions of physical credit card terminals. Merchants can manually process credit card transactions, issue credits, void transactions, view online log files and manage any Internet-based business-from any computer with an Internet connection.

Virtual terminals connect to a merchant's Web site through an application program interface (API), which is the instruction one program gives to another program to exchange data. In e-commerce, the API gives you the instructions on how to link a merchant's shopping cart or order form to the virtual terminal.

It's usually very simple to link a merchant's Web site to a virtual terminal. The various gateway providers have already pre-integrated hundreds of popular shopping cart programs. Because of this, merchants have the ability to simply choose the preferred virtual terminal/payment gateway when setting up their shopping cart-no programming needed.

I asked two gateway providers, Authorize.Net and, the following questions:

  • Which gateway products would you recommend merchant level salespeople (MLSs) include in their packages?
  • What sets your Internet-based products apart from others?
  • What are the major selling points of your gateway products?
  • How would you recommend MLSs present your Internet products?
  • How do MLSs benefit by selling your products?

Here's how they responded:

In order to assist MLSs in the sales process, Authorize.Net designed its value-added services (eCheck.Net, Automated Recurring Billing, Fraud Tools and Verified by Visa) to be merchant self-provisioning while providing residual streams to MLSs. This allows MLSs to sell merchants the gateway as a standalone product or provide them with a customized package.

Authorize.Net's products are compliant with the Visa CISP program, and they provide integrated credit card and ACH processing and integration with more than 300 Web development tools and shopping carts. The products offer brand recognition, proven stability, near universal compatibility and competitive pricing.

Authorize.Net's products have an innovative IP-based payment platform that is capable of processing payments in card-not-present, card-present, MOTO and wireless retail environments. The company offers free customer support either by e-mail, a toll-free number or online chat and dedicated reseller support and account management.

PayMeNow company spokesperson, Darrin Ginsberg, recommended MLSs sell Payment Gateway and Virtual Terminal-they allow the processing of all major credit cards plus ACH transactions. PayMeNow's products are free to ISOs/MLSs.

There are zero setup fees and zero license fees per copy. Every account includes a free ACH account that allows merchants to process up to $10,000 per month (up to a $200 average ticket) without any additional paperwork or applications-not an upsell like at many gateways. includes a recurring billing option, too. And the company partnered with a leasing company so MLSs can lease the Gateway to merchants just as they would a terminal-with leases as long as 36 months available.

For customers who don't want to pay to buy or lease a terminal, you can use as a 'drop down' sales tool. Give them a free copy of it and start earning residual income-the product does everything a credit card terminal can do and more. Use it as a virtual terminal or integrate it into a shopping cart or Web site for online real time orders.

Ginsberg said the best way to present is to get in front of a computer and demo it using a demo login and password. He said it's so simple that anyone with any computer experience can do it.

I posted the following on the MLS Forum:

Do you sell Internet related products? What benefits do you get from offering such products as gateway services, Internet-based transaction capabilities and other virtual technology? If you don't sell Internet related products/services, what is the reason?

As you can see from the sampling of responses, MLSs have definite opinions about whether to Internet...or not:

"...A merchant with a Web site and shopping cart gives extra value to their customers, which creates additional sales and revenue. It also adds to our bottom line by providing additional services to our clients.

"The problem is most agents need additional training on e-commerce solutions. We have run free online seminars direct to the merchants to teach them about the Internet and how to utilize it." -Bill DeLanoy

"The Internet is a nightmare. New merchants are looking for a cheap deal and most will never do any business and will be calling over the high cost each month...We go after our own merchants who are expanding to the Internet or merchants who are already on the Internet. They can afford the monthly fees." -ccguy

"...I think that Internet processing is not a major focus of a typical MLS. Instead, Internet processing is more of a niche market for a handful of ISOs and larger MLSs that focus on it...I don't necessarily see this as a negative since I think specialization is one of the keys to success in our industry." -Chris West, CDGcommerce

"I don't sell Internet processing unless I stumble on it. I am primarily a cold call and referral person. I would like to find more Internet business as the ones I have done are worth more volume than ten of my average deals. I always ask my traditional retail merchants if they are selling on the Internet and most are not." -bankcardrep1

"...Most of our Internet customers are selling business to business, where there is a large demand for Web-based purchasing. We have found very little demand from retailers to sell their products online." -ecom

"We use the Internet for customer support...Most of our customers are regular retail and therefore do not use the gateway as the major channel for their sale.

"However it would be interesting to know what marketing strategies people use nowadays to establish relationships with gateways and the reason ISOs prefer one gateway over the other." -nvs98

Personally, I have set up hundreds of marketing partnerships and sold thousands of virtual terminals to merchants across the United States.

Although our company specializes in the small- to medium-sized retail/restaurant market, MOTO/ Internet merchants are 25% of the new accounts we set up each month. These accounts are profitable and the attrition rates are only slightly higher than processing retail accounts.

Card-not-present merchants represent a huge opportunity. Just like the retail market where you can choose to specialize in restaurants, wireless accounts, hotels or cash register systems like Micros, card-not-present merchants offer the same wide variety of opportunities. You just need to decide to focus on a few.

If you see yourself as someone that's uncomfortable with talking about technology-the Internet, shopping carts, API, compatibility, etc...then start selling virtual terminals to merchants that have no intention of selling anything on the Internet.

You are offering merchants a terminal you already know how to sell-a virtual terminal still makes sales, voids transactions, issues credits, close batches, etc. The only difference: merchants log on to the Internet, enter their usernames and passwords and start processing. It's that simple.

Don't walk away from a sale when you get hit with a price objection on the cost of buying or leasing a new terminal.

Instead, offer a few different options up front or come back with an offer to set them up with a virtual terminal for FREE. What merchant, already showing an interest in setting up a merchant account, can say no to that?

I encourage you to market to those businesses that would benefit greatly from using a virtual terminal. Consider merchants that:

  • Don't have Web sites and want to process credit card transactions on the Internet
  • Have Web sites but also want flexibility to process orders coming off-line such as orders taken over the phone or received via fax, e-mail or in person
  • Have Web sites with a single order form or with a shopping cart in place and want to upgrade to live payment processing
  • Need or want to process recurring billing

My next column will focus on selling to merchants who need to accept government credit cards and, therefore, are required to support Level 3 processing.

Keep your eyes open for my next post on the MLS Forum on this topic. Feel free to send your comments on this column and any other topics to .

"When I took office, only high energy physicists had ever heard of what is called the World Wide Web ... Now even my cat has it's own page."
-Bill Clinton

See you next time where the rubber meets the road.

Ed Freedman is founder and President/CEO of Total Merchant Services, one of the fastest-growing credit card merchant account acquirers in the nation. Ed is the driving force behind all business development activity as well as the execution of Total Merchant Services' marketing plan, including recruiting and training independent sales offices and establishing strategic alliance partnerships with leading vendors, so that Total Merchant Services can provide its customers with the highest quality and most reliable services available.
To learn more about Total Merchant Services, visit the Web site at . To learn more about partnering with Total Merchant Services, visit or contact Ed directly at .

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