Shopping Guide to Real-Time Credit Card Authorization for Internet Websites

by Dr. Ralph F. Wilson
Web Commerce Today, Issue 1, August 15, 1997

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If you've researched various options for real-time credit card authorization for your website, then you know how confusing it can be. We've spent many hours looking at the choices available in August 1997 (and the field is changing very rapidly). Here's what we found with our recommendations.

Groupings

Real-time credit card authorization can be divided into three general groups

1. Service bureaus which provide a gateway from a website to the processor. These are divided into three subcategories, service bureaus which
   • Host the credit card information entry page on their own SSL secure server
   • Provide a CGI program relaying credit card information from the merchant's SSL secure server
   • Systems only available for purchase from banks and financial institutions
2. Web hosting services which host the merchant's entire site and enable credit card processing
3. Web server or commerce software which integrates credit card processing

Smaller merchants will be most interested in service bureaus, while stores large enough to have a dedicated Web server will probably opt for systems integrated into their server software.

Pricing

Pricing models vary, so be careful. Most systems charge a substantial set-up charge. Most also charge a monthly fee plus a transaction charge (usually a fixed amount, but sometimes a percentage of the transaction). As you shop make sure you figure the total fees the first based on a sample number of transactions per month over 12 months.

Service Bureaus

The most natural division among service bureaus is where order pages are hosted. Both CyberCash and Online Analysis allow you to set up a secure connection to the processing network from SSL secure pages on your own website. This is probably preferable, since it keeps all the data entry on a single site, but set up can be time consuming, and may require a programmer. These solutions are usually chosen by ISPs rather than individual merchants.

Most service bureaus have opted for hosting on their own SSL secure serve the part of the ordering sequence in which the purchaser inputs credit card information. A typical sequence is described below:

1. Purchaser selects purchases on merchant website and fills out order form. Order information is recorded in an order file on the merchant's website.
2. To fill out credit card information, the purchaser is taken seamlessly to an SSL-secure Web page on the service bureau's Web server. Order information such as order total is automatically from transferred from the merchant website to the service bureau's server by means of a simple CGI program. This webpage can be customized with the merchant's logo, etc., so the purchaser will probably not even be aware of the transfer.
3. Credit card information entered on the service bureau webpage is relayed over modem and leased high-speed telephone lines to processors.
4. When authorization (or non-authorization) codes are received from the processor, these codes prompt return of the purchaser to a "thank you" webpage (or to one which says "Your credit card purchases have exceeded your credit limit," or whatever), completing the transaction.
5. The service bureau sends an e-mail message to both the purchaser and the merchant confirming the order.
6. At the close of the day, the "batch" of card orders made throught the service bureau are automatically closed by the data processor, and the funds transferred to your merchant account bank.

A third variation is for a Web hosting service to provide credit card processing only to merchants who host their entire website with that ISP. Of course, none of these distinctions is so clear-cut. Some of the service bureaus which typically host only the credit card entry page will also host the whole site or, if requested, allow the merchant to host the credit card entry page on his own secure site.

Typically, merchants have access to a password-protected Web page containing daily transaction reports. Online forms are also available so a merchant can credit back a customer's credit card for any amount in the case of cancellations or returns. Effectively, the merchant can use the service bureau to replace the $350 desktop software (or cardswipe machine) he might otherwise use to key-in and batch process credit card purchases. The better service bureaus have software carefully designed to prevent duplicate transactions caused when an impatient purchaser clicks again (and again) on the "Make Purchase" button.

Most of the service bureaus are licensees of ICVerify, the leader in PC desktop software for batch transactions processing. Licensees benefit from ICVerify's relationships with more than 100 processors, and are thus able to link to processors for nearly every merchant. Companies which set up their own systems may have fewer processors they can work with, so make sure your processor is available with the specific service bureau you select.

Now let's look at some of the various companies offering these services. Note that information and prices are very subject to change in this immature and rapidly growing industry. Information was current as of our publication date.

Service Bureaus Service bureau hosts the credit card info page on its own secure server. These are easiest for the merchant to implement, since service bureaus usually provide installation, and CGI programming is implemented on the service bureau's server, not the merchant's.
Company	Pricing	Notes
Anacom Merchant Services SecurePayTM Divison of Anacom Communications, Inc 16807 Park Hill, Suite 200 Dallas, TX 75248 972-304-5012 Fax: 972-304-3285 questions@anacom.com George DeCourcy, President	$279.95 set-up charge, $34.95 per month, plus 25 cent per transaction charge. The first two months must be paid in advance. Anacom wins our Web Commerce Today Editor's Choice designation for pricing structure and ease of set-up and use.	ICVerify licensee. Anacom e-mails both the merchant and purchaser a confirmation when an order is placed, Information is also retained on the server for later retrieval. If requested Anacom provides hosting of the credit card information page on the merchant's secure server. Anacom provides an online report page, as well as a database which may be queried by date. Software is designed to detect a purchaser's impatient multiple clickings on the "order" button to minimize duplicate orders.
The Processing Network SecureChargeTM 801 Pine, Suite 8A Seattle, WA 98101 sales@processing.net (206) 720-4904 Fax (206) 860-4338	Set-up charge of $275, plus $100 per month for up to $5,000 in transactions. The rate is 2% on monthly amounts above $5,000.	ICVerify licensee.
WebChargeTM American Banking Service 800 S Orange Ave, Suite 102 Orlando, FL 32809 407.888.9091 fax 407.888.9092 Darren Humay	Set-up fee $299. Ongoing fees include a montly fee plus $0.50 per transaction and 1% of the total.
Credit Card Network 815 S. Weller St #200 Seattle, WA 98104 206.287.1794 Fax 206.287.1530 Mark Muchnick, General Manager info@creditnet.com	$395 signup fee includes 2 free hours of software support. Monthly access and support fee $25. Plus 1% transaction fee. Other plans available, $0 signup with $50 per month fee, 6 month commitment. Other plans for larger volumes.	ICVerify licensee. Order page can be set up in "remote mode" on CCN's servers. "Local mode" is also available in which a customer's order is collected by the merchant's order form and it is sent to CCN using PGP encryption.
SecureProcessTM Automated Transaction Services Inc. 2026 Bridgegate Court Westlake Village, CA 91361 (800) 435-6981 Fax: (805) 379-9772 sales@atsbank.com	One-time software and set-up fee of $795. The processing fee for each credit card transaction is $1.00.
FIRSTpay Service First Security Transaction Network FIRSTpay 4780 Ashwell Lane Suwanee, GA 30174 (888) 592-5251 (770) 889-1255 info@fstn.com	One time setup fee of $395.00 and a service charge of 1%-7% of the total transaction based on business type, with a $40.00 minimum.
Octagon Technology Group 1340 Remington Rd, Suite E Schaumburg, IL 60173-4821 847-843-7400 Fax 847-843-7676 Ann Myrna, Sales Mgr. info@otginc.com	Set up for "transaction only" service is $600. In addition there is a $90 cent per transaction fee, and a $25 monthly fee.	Octagon offers customization of the order notification information, including the printing of shipping documents if desired, and can make the information available via fax, phone, mail, E-mail or file transfer. Octagon specializes in working with foreign merchants. They are one of the pioneers in facilitating real-time credit card authorization.
VersaNet International, Inc. 1313 Churchville Ave. Staunton, VA 24401 540-885-4130 Christopher West, President	SecureOrderTM module is $295. Credit card activation fee $99. In addition, there is a $1 transaction charge.	ICVerify licensee.
Service Bureaus Merchant-hosted webpage transfers credit card information to service bureau via encrypted message. These solutions are probably best pursued by an ISP, since some programming and installation is required.
Company	Pricing	Notes
SocketLinkTM Online Analysis 3031 Tisch Way Suite 605 San Jose, CA 95128 phone 408.260.3260 fax 408.260.3261 info@onanalysis.com	Annual tiered fee structure. For example, $865 annually enables up to 200 transactions per month, with a on-time $235 set-up charge. . We think this is a very good solution for many, due to its fast connection, moderate prices, and reliable service.	ICVerify licensee. Perl script on storeowner's website activates SocketLinkTM module, a server-to-server secure transaction agent, which calls Online Analyis via a secure SSL connection. Processing then takes place via fast leased line from Online Analysis to the processor. Requires specific operating system platforms. Prefers First Data Corp. Envoy processor. For other processors a $735 set-up fee is required.
CyberCash, Inc. 2100 Reston Parkway, Third Floor Reston, VA 20191 (703) 620-4200 Fax:(703) 620-4215 info@cybercash.com	Software is free and CyberCash levies no installation charge. It gets its revenue from transaction fees that are collected from either processors in the Credit Card service or merchants in the CyberCoin service. Our bank, for example, charges a 15 cent transaction fee for CyberCash transactions. Your ISP may levy other charges. One of our ISPs, Internet Servers, Inc., for example, charged $50 set-up and $20 per month to enable the service. From a cost-to-the-merchant perspective, CyberCash is an attractive alternative if you have an ISP who already has it set up.	Requires installation and configuration on Web host of Secure Merchant Payment Server (SMPS) and CashRegister 2.1, now available on a number of hosts. While CyberCash has been pushing their proprietary wallet system enables micropayments (CyberCoin), such a wallet system would need to be very widely adopted to be useful to merchants. It's one of those ideas that works better in theory than in practice. Only a tiny fraction of Internet shoppers have downloaded a walled from CyberCash's website. Fortunately, CyberCash also accepts credit card numbers the purchaser enters on an SSL secure form. Ver 2.1.2, operates on Solaris, Windows NT, HP-UX, SGI Irix, SunOS, BSDI, Digital UNIX, SCO, FreeBSD, AIX/PowerPC, and Linux RedHat. CyberCash has set up financial relationships with 98% of the credit card processors, so it is widely useful. However, there have been some reports of ISPs' frustration with CyberCash's after installation service response time.
NetBanx Ltd. NetBanx House Station Court Station Road Great Shelford Cambridge CB2 5LR, UK	This British firm charges an initial setup fee of £500, and a percentage of all transactions that take place using the system dependent upon volume.	For all transactions, NetBanx detects each customer's TCP/IP identification data and records it on a secure server, along with other details of the transaction, for security and audit purposes.
Proprietary Software available only through banks or financial institutions, bypasses third-party service bureaus.
Company	Pricing	Notes
VeriFone vPOS VeriFone Internet Commerce Division 800 El Camino Real Menlo Park, CA 94025 Kimberly Kasper kimk@verifone.com 415-463-2335 Fax: 415-617-1516	Sold only through banks and financial institutions: Wells Fargo, First USA Paymentech, Royal Bank of Canada, Bank of American	A graphical interface to manage the various transactions and reports. Merchants can review transactions for fulfillment and inventory management, reconcile daily transactions for close of business - and generate sales reports. Uses an encryption process to send and receive information from processor.
Hosting Service Provides both hosting and credit card processing. Here the host service and the service bureau are merged.
Company	Pricing	Notes
Infodial 22761 Pacific Coast Hwy,Suite 101 Malibu, CA sales@infodial.net (800) 932-9311 (310) 317-4461 Jane and Greg Way, owners ICVerify licensee	$195 one-time fee to set up CashierTM. $65 to set-up hosting service, $65 per month. No per-transaction charge.	A Web hosting service which includes CashierTM real-time credit card processing among its many services. Infodial has just lowered their set-up fee from $695 to $195, making this an excellent choice for some merchants.
Integrated Systems Credit card processing integrated into Web Servers and Commerce Systems. Proprietary systems.
Company	Pricing	Notes
Actra Cross Commerce 610 Caribbean Drive Sunnyvale, CA 94086 info@actracorp.com 888 706 2600.	Integrated	Includes direct connections to First Data Corp. processing. MerchantXpert for online retail commerce is bundled with Netscape Merchant System 1.6
LivePayment	Integrated	Extension to Netscape Enterprise Server which provides connections for credit card processing 2.0 Runs on Sun Sparc Solaris 2.x and Windows NT 3.5.1
Open Market, Inc. TransactTM 245 First Street Cambridge, MA 02142 sales@openmarket.com 617.949.7000	Integrated	Module in Open Market's Electronic Commerce system which provides real-time credit card processing.

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