What’s Required to Support Online Credit Card Payments?

Posted on May 26th, 2008. Written by Rico.

Something we’ve noticed: most local sites don’t support credit card payments.

That’s just too bad. So many websites could increase their profits by accepting payments from credit card holders online. The RSUN store is one of them; we cancelled an order at the last minute because we’re honestly too lazy to deposit money into RSUN’s bank account, especially for a relatively cheap item that costs P550.

And we imagine that load.com.ph would also get a lot more orders if it accepted credit card payments. Currently, the only way to pay for the prepaid cards the website offers is through GCASH, Smart Money, or again, direct bank deposits.

Two more websites that would benefit from credit card support are 8mcdo.com and magoos.com. Why pay for food delivery upon arrival when you can pay for it as you order? We’re pretty sure it’s a lot more convenient to give your credit card number than set some cash aside.

Sure, we understand that not everyone (or more like the majority) in the Philippines don’t have credit cards. Many Filipinos don’t even meet the requirements to get one.

Still, we’re at a loss on why few, if any, local websites support credit card payments. Could it have something to do with the cost? When we meet with some Yehey executives last year, they were working on Kaban, a local payment portal that would provide local online retailers with a way to support credit card payments. What stood out was the initial cost of Kaban; retailers had to pay at $1000 to start using the basic version of the service.

Perhaps accepting credit card payments online could be expensive; it could also be that acquiring the necessary accreditation to do so is too cumbersome. Yet this is a classic example of spending some money to make more of it. Setting up mechanisms for credit card buyers may cost a lot of time and money, but it can also increase profit.

A widely accepted method of convincing more customers to spend more money online is to make the buying process as convenient as possible. Credit cards make paying for things very easy. Which is why we ask again: why don’t more local sites accept credit cards? We’re in the dark here, so if you know the answer, feel free to let us know below.

(On the flipside, credit cards in the Philippines are particularly dangerous for their owners, according to Market Manila. We’d also like to thank Market Manila for the photo used in this article.)

This entry was posted on Monday, May 26th, 2008 at 8:45 am and is filed under Editorial. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site. You can leave a response, or trackback from your own site.

Rico

Rico Mossesgeld is the founding editor of Technograph. Learn more about him at rico.mossesgeld.com/about.

http://www.load.com.ph Erick Kalugdan

First, thank you for mentioning our company – load.com.ph

Anyways, the one-time setup costs and the cumbersome accreditation requirements are NOT really the problem. The reasons why we shy away from credit card payments are:

1) Transactions fees – the transaction fees payment providers usually charge are more than the margins of selling prepaid products

2) Charge backs – Charge backs happen when users use stolen credit card numbers or when users suddenly decide to do so. Yes, if for some reason, the user decides to report that the credit card transaction he made was not his, the credit card company will favor him and charge back the merchant, no questions asked. To make things worse, this can happen in a 6-month period. Yes, you can ask for a charge back for an online transaction made 6 months ago! Merchants are only allowed 1% of all transactions to be charge backs and when it happens, you will pay the original transaction amount plus penalty and by that time, the product has already been consumed.

Now to answer your question – What’s required to support online credit card payments? – I would suggest the following:

- lower transaction fees
- change the rules for charge backs. the merchant should have a chance to explain; and shorten the 6-month window for charge backs

I just wish there’s a payment provider that can do that :)
http://technogra.ph Technograph

Thanks for dropping by Erick! Great stuff; we didn’t know it was that simple and complicated at the same time. :)

The point you raise about charge backs is very interesting, because it’s a classic problem retailers and customers face: what’s the best balance between protecting both parties?

Perhaps in your case, there should be an exception to charge backs. Most prepaid card retailers have a no return policy—we don’t see why that can’t be extended to credit card transactions.
http://www.marketmanila.com Marketman

Thank you for linking your post to an earlier post on credit cards on Marketmanila.com. I would appreciate it if you would note that the photo you used up above was taken from marketmanila.com, so as not to misrepresent its original source. Many thanks. Marketman.
http://www.pinoywebstartup.com Marie Casas

If merchant accounts available locally didn’t pose such high costs just to get started. Mozcom’s Payeasy seems to be the best deal but it still starts at P10,000 (assuming you already have a shopping cart and have programming expertise). Then transaction charges are about 6%? Damn, that’ll really eat up the margins.
Equitable, AFAIK requires a maintaining balance of somewhere in the mid-6 digits.
Well, I guess the bigger companies could and should afford to shell out that much.
http://technogra.ph Technograph

Marketman: Thanks for being open. To be honest, we thought that our presentation of your article as a useful resource would’ve been “enough”. Changing as requested.

Marie: P10,000 sounds very reasonable, but the 6% and the six-digit maintaining balance deserves a big aray.
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http://www.ursolutions.ph Robert Reidenbach

Perhaps if these e-vendors have access to good authentication methods (Such as AdmitOne, RSA, etc.) and leave IT security worries to experts (Provided by a Service Level Agreement), they’ll be able to concentrate on their core business functions.
http://technogra.ph Technograph

Maybe the problems are mainly financial, as laid out by Erick before? On the other hand, maybe a local service provider could take care of the details—including money matters—and allow their customers to concentrate on business (like you said)?

Why don’t you guys give it a host? :)
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http://www.Doncher12.multiply.com Donalyn Curitana

Hi..

Im selling clothings online and i want to accept payment thru credit cards.. I am thinking that this maybe one of the marketing strategy to have more customers.

Please help what step am I going to do..

Thanks!

Regards,
Donalyn Curitana