With the economy in flux and consumers feeling the far-reaching affects in the rise of gasoline prices, one major U.S. bank is getting pro-active with credit-card holders it deems to be at-risk.

According to the San Francisco Business Times Wells Fargo has sent letters to card holders the bank feels may be in danger of falling behind on their payments. The letter is not a warning or a slap on the wrist – to the contrary it offers help in the form of setting up automatic payments, coming up with a plan to pay down a balance, or putting them in touch with a credit counselor.

While some Wells credit-card customers may be miffed about getting one of the letters – the bank would not disclose what the parameters were for a customer to be on the mailing list – some disgruntled cardholders might be a small price to pay for avoiding costly delinquencies.

The bank has ready access to some members’ financial situations as many of those with a WF credit card have their accounts with the bank.

And Wells officials may be smart to be moving pro-actively. According to the Federal Reserve and the FDIC, charge offs (the point at which a creditor writes off an account balance as a bad debt) on credit cards increased in the third quarter of last year.

Some banks have also moved to lower cardholder’s credit limits, theorizing that if they do have problems paying their bills the outstanding debt the bank is carrying will be lower. However, the move has hurt some consumer’s credit scores, as their lowered available credit amount is now closer to the balance they are carrying, skewing their rating through no fault of their own.

And while this has ruffled some feathers, again the banks are willing to do so if it can help them lower their risk. While they don’t want anyone defaulting on their card, better a possible charge off of, say, $2,000 than $6,000.

For more information about online credit card processing please check out Cardaccept.com

Most of us are pretty careful consumers. Any time we’re going to be spending a lot of money we do some research, ask a lot of questions and do whatever we can to find the best deal possible. It’s just smart business. We’re looking for the best return on our investment. And the owner of an online business that wants to sign with a company for credit card services is the same. Just as you will be taking a careful look at any company you will sign with to allow you to accept credit cards, be ready for those companies to take a close look at your business when you apply for service. Like you, they want to know that any company they are doing business with – especially business that involves such a critical degree of safety and security – is legitimate. So don’t be surprised or put off by any credit card processing provider that asks for basic information like how long your business has been in operation, what your monthly sales are and what sort of goods and/or services you offer. It lets them know you are someone they want to do business with. And it allows them to assemble a great package of services for you.

There are some numbers floating around out there that should compel any e-retailer without online merchant account services to reverse that policy.

First, while the retail sector is getting hammered this year by a sluggish economy, the rise in gas prices and the resulting increase in the cost of doing business, the online retailing world is quite healthy.

According to Shop.org’s “The State of Retailing Online 2008” report, Internet retailers are seeing a 17 percent increase to $240 billion in sales. The three largest gainers, according to the 11th edition of the study, conducted by Forrester Research Inc., were:

Apparel — $26.6 million

Computers — $23.9 billion

Automobiles — $19.3 billion

According to a Shop.org spokesperson the online shopping world is predominantly broken down into two segments – those who shop the ‘net looking for the lowest price and bargains, and those who do so for the convenience factor.

All of this is good news for online business owners with merchant services who, according to several retailing industry sources, are seeing more than 80 percent of everything bought online paid for using a credit card.

Second, that percentage is expected to rise in spite of the fact that the number of new Internet users is flattening out. The increase will come from Generation Y – that group that is between 18 and 29 years old. They are described by ReadWriteWeb.com thusly:

“The term ‘digital native’ applies to most Gen Y’ers. Those in Gen Y grew up around computers, the Internet, mobile phones, video games, and mp3 players. They are Web-savvy multi-taskers, able watch TV, surf the Web, listen to music, and talk or text on their phones, often performing several of these things at the same time.”

As such they have grown up looking at the Internet as a mainstream shopping medium. They have used it to reload cel phone minutes and to get music downloads. But as each wave of younger Gen Y members graduate from college in the coming years, most will be getting their first job and experiencing an increase in disposable income that is forecast to fuel larger online purchases.

If you have an e-business that is not set up to accept payments online what further rationale do you need that your site is destined to underachieve in the coming years?

We’ve received a few emails since we started this site containing stories about real people’s experiences with various credit card processing companies. Below is one that kind of stood out to us so we’re presenting it here. If you have a similar story, please drop us a line and we may publish it as well.

I didn’t set out to become an online business owner, but that’s what I have turned into. Now I’m not going to threaten Amazon or Shopzilla, but I’m bringing in a nice little revenue stream and for that I have to thank credit card processing on my site – specifically Charge.com – but I’m getting a little head of myself.

Three years ago we were cleaning out my mother’s attic and I found box after box filled with my old comic books. Most were in pretty good shape so I got this wild idea that I’d sell them on the Internet.

I got a domain name and a good hosting service and I thought I was ready to open for business when a buddy asked me if I had added an eCommerce merchant account. Well, first he had to explain what that meant – did my site have the capability to accept credit cards. When I told him I didn’t he suggested that I add that option before trying to make my first sale. More than 80 percent of everything bought online is paid for using a credit card, which was enough to convince me to at least look.

The first company I looked at had a long list of fees, and most of them due before I made my first sale. Like $250 for submitting an application – and no refund if I was rejected. There was another $250 for my Internet shopping cart software. I stopped reading at that point. I couldn’t believe it was going to cost me $500 (probably more) to have merchant services on my site.

So then I looked at a site that said it had the lowest prices. The problem here was the language on their site. If I was reading it correctly to get the big discount you had to conform to a certain set of parameters. I tried calling their sales department and I felt like I was on a used-car lot. Instead of answers I was getting a high-pressure sales pitch. Long story short I crossed the “discount” option off my list.

The third site I looked into was Charge.com. The first thing that made me feel good was no application fee. In fact I didn’t spend a dime getting set up, which I was able to do with 24 hours after I was approved. But that wasn’t what really sold me.

First, their rates for things like the payment processing gateway was well below the industry norm (and I checked around) as were their fees for monthly minimum transactions and the monthly statement fee. I didn’t expect everything to be free, but Charge.com had a schedule that I could live with.

But what really sold me was the customer support. I spent about 45 minutes on the phone before I signed on and, based on the first two companies I considered, I really grilled the sales rep. She took all the time needed to answer my questions, and I never felt like my arm was being twisted to sign up.

I did sign up with Charge.com and it’s still hard to believe that a little comic book e-store like mine accepts VISA, Discover, American Express and MasterCard. It makes my cash flow smooth but it also gives the people who buy from me the knowledge their transactions are secure.

By the way I have expanded my business to selling comic-related items – like the DVD movies of heroes like Batman, Daredevil and Superman, action figures, and other collectibles. Who knows? One day I may be the next big thing on the ‘net.

I’m sure the folks at Charge.com don’t wear tights or capes, but they are heroes to this small online business.
~ Jim O. - site withheld at author’s request

There was a time in the early days of the Internet that e-businesses did not have to be as consumer-savvy as they are today. Indeed, no one had to be because the medium was breaking new ground daily.

Back then some of the early “shopping” sites were nothing more than digital versions of a print catalogue. To make a purchase work the consumer either called a toll-free phone number and read their credit-card numbers to an operator, or they printed out their order form and mailed it to the company with a check. So much for high-tech.

Happily over time the online shopping experience has gotten better along with just about everything else delivered to us over the Internet. But as a virtual business owner, have you changed with the times and the technology? Do you understand what drives today’s shopper? And are you ready to give them what they want?

Back in the aforementioned early days of online shopping consumers had a lot more patience with the process – chiefly because there was not a faster alternative, assuming they could not find what they wanted at their shopping center.

However, thanks to various Internet-delivery developments people have gotten used to the fact the online shopping can be fast – they can get their merchandise overnight if they are willing to pay for the privilege. And they also know that much of this speed comes from being able to pay using their credit card.

From the time a person enters their card information to the time they get a confirmation e-mail is usually less than a minute – and that includes the fact it is a secure transaction. Think of it – within 60 seconds they can pay for what they want, arrange to have it shipped the way they want it shipped and get a tracking number.

Now imagine trying to take that same customer back to those early days where just getting the payment can take a couple of days, depending on the mail service, and you’ll see how they have been spoiled by modern Internet shopping.

An additional consideration is that the ease of opening a business online has made the Internet look like the Oklahoma land rush. There is no shortage of people who have started e-businesses, which makes the competitive landscape potentially treacherous. In the real world if a person can’t find the wrench they need at Home Depot they have to drive to Lowe’s or Ace, so they might rethink their needs. In the virtual world they can find about 10 competing e-stores in less than a minute.

So if your site is not delivering on a good shopping experience by not having credit card processing services, in the consumer’s mind you are sending out the signal that you don’t care about what they want. And is that really the message you want to communicate?

So even if you don’t see being set up to accept credit cards as a competitive advantage, not having that service will almost certainly place you at a disadvantage.

Merchant services may not be the linchpin of your online business, but not having them will be a definite impediment. Starting and building a business can be tough enough. Make sure they people coming to shop on your site find the online credit card services they want. Every time they come back and shop it will be their way of saying “thank you.”

At the end of last year some retailing tracking studies placed online credit card use accounting for 80% of all sales. Clearly the consumer has spoken in favor of dealing with e-shopping sites that accept payments online.

This comes in spite of the fact that there is consumer awareness of identity theft and credit card fraud issues. However, the speed and convenience of credit card use trumps those concerns. Not to mention the additional buyer protections that comes with several of the leading credit card companies.

To open greater accessibility to the ecommerce industry, CardAccept.com has announced it has eliminated several of the fees and charges that have heretofore served as a stumbling block to a segment of the online business community.

To make the credit card services easier for online retailers to access CardAccept will no longer levy an application fee, gateway transaction fees, AVS fees – as well as fees for access to technical support and other costs.

With the institution of this policy CardAccept effectively opens the option of merchant account capabilities to e-business owners who previously may not have been candidates to accept payments online. According to industry estimates, some online businesses have seen out-of-pocket expenses as high as $1000 just to establish the credit card service component.

CardAccept.com services include the ability to accept checks by phone, fax or over the Web – any of which increase a business owner’s cash flow situation.

About CardAccept.com
In business since 1993, CardAccept specializes in merchant services for all types of businesses. The company provides the tools for secure real-time processing and offers superior safety protocols. From its brick and mortar terminal options to its ecommerce solutions, CardAccept makes merchant accounts easy to manage.

For the online business person who is getting ready to make the move and add credit card processing, the obvious first question is where to find a provider.

If you sit down at your computer and enter “credit card processing” or “accept payments online” into a search engine you’re going to get hundreds of sites to choose from. And this is where a rookie mistake is often made. An e-merchant sees all those providers and wonders if the smart play would be to use their local bank.

While that bank has been a great partner for things like their business checking account, banks as a rule are not the best place to get merchant services. At least not a place to look where the deal will be competitive.

Part of this stems from all the services that banks offer – savings and checking accounts, certificates of deposit, mortgage and home equity loans, insurance and financial planning. Even if they do these things well, and most banks do, their resources are spread too thin for something as important as merchant services.

For that reason banks usually can’t compete when it comes to the fees associated with credit card processing services, and many lack the flexibility needed. Indeed, some banks may not be able to handle the merchant services needs of smaller business like those that operate over the Internet.

It is smarter business to place your credit card processing with a company that specializes in that discipline. Because it is all they do they can offer better rates and are better able to put together cost-effective package of services so your e-store can accept credit cards.

And what about the bank? Well, when credit card acceptance boosts your profits you’re going to need somewhere to deposit all that extra cash.

There are, no doubt, people with a modest online business that think credit card processing isn’t for them – that is something only the bigger players can afford and benefit from. And while there are costs associated with accepting credit cards, the return on investment can more than justify those costs.

This is why it’s never good to assume anything about the merchant services business without devoting some time to research. Look through a few sites and you’ll find that the credit card processing business is making huge inroads in reaching out to businesses of all sizes.

Several sites have paved the way into credit card acceptance by waiving several of the fees that some other companies charge. Couple that with the increased sales a majority of online merchants enjoy when they add credit card processing and it’s  easy to see those credit card related fees will more than pay for themselves.

So if you are one of those small businesses that have shied away from credit card processing, now would be a great time to shop around for a good merchant account provider.  Chances are, they’ll be able to offer  you great rates and setting everything up is a breeze.

If you want you business to see more sales and profits and you want to keep up with the competition, you have got to take credit cards from your online site; PayPal simply won’t cut it.