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Collecting event registration fees with online credit card transactions.
Online credit card transactions are becoming much more common as consumers grow
comfortable making online purchases. This change in thinking puts pressure on
event planners to allow event participants to pay registration fees online using
their credit cards. In the end, both event planners and participants win in
terms of convenience, accuracy and security.
In this article we will define several common credit card processing terms you
need to know, outline a simplified sequence of events that takes place to
process a transaction and highlight several points for you to consider before
getting started with online credit card processing.
Common Terms
Merchant Account
An account set up with a credit card company to allow you to process credit
cards. Funds from the merchant account are automatically transferred to a
regular bank account.
Online Merchant Account
Same as above, but this account has been approved for online transactions. To
get this type of account the credit card companies will want to see that you
have proper software and security in place.
Discount Rate
This is a percentage that the credit card company keeps in exchange for
processing a transaction. If your transaction is for $100, and your discount
rate is 3% you would pay three dollars to the credit card company and end up
with $97. The discount rate charged depends on your volume of transactions, your
processing history, the type of goods or service you are selling etc. Online
merchant accounts often have a higher discount rates than standard merchant
accounts.
Real Time Processing
This is an online purchase where the credit card is verified and processed
within a few seconds of submitting the order. The person making the purchase
will see an approved or a declined screen and receive a receipt via email.
Manual Processing
This is where credit card information is collected but not immediately
processed. If this is the case, transactions are processed manually at a later
date using a merchant account not set up for online transactions.
Gateway Company
Gateway companies facilitate the transactions between a website and the credit
card company and handle the transfer of funds into your merchant account.
Sequence of events
Here is a simplified sequence of events that take place to process an online
real time credit card transaction for an event registration.
- The event participant fills out the online from, enters his/her credit
card details and clicks submit.
- The credit card details are sent to the gateway company for processing.
- The gateway company sends the transaction details to the credit card
company that issued the card.
- The credit card company approves or declines the transactions and
reports back to the gateway company.
- The gateway company passes this information back to the online
registration system and the event participant. If the transaction is
approved the event participant will see a webpage confirming the transaction
and will receive a receipt via email. If it is declined the event
participant can try again.
- The online registration system is updated with the information from the
gateway company.
- Funds are transferred to a merchant account and the then to the
designated bank account.
Once you decide that you want to allow your event participants to pay
online with their credit cards, you need to decide if you will apply for
your own merchant and gateway company accounts or find an online
registration provider that will process transactions on your behalf using
their accounts.
Both routes have pros and cons and you will have to look at your individual
situation to determine the best option.
Using an online registration provider’s accounts can get you ready to
process transactions in less than a day and will allow you to avoid all of
the set up and monthly fees from the credit card and gateway companies.
On the other hand, if you are processing a significant volume of high dollar
transactions throughout most of the year, you may want to consider opening
your own merchant account.
Before deciding, run some numbers and consider these points.
- What is the cost of application fees with the credit card companies
and gateway company?
- What is the cost of monthly fees with the credit card and gateway
companies?
- What kind of discount rate do you qualify for with the credit card
companies?
- How much will your online registration company charge to process
transactions using their merchant account versus using your own account?
- How much does it cost to have your online registration company work
with the gateway company you choose?
- How long will it take to get set up with your own accounts?
- How often do you need to process online transactions? Consider the
monthly costs of having your merchant and gateway accounts while not
using them.
- Do you have qualified staff with time to handle the accounting
related to your own merchant accounts?
Please feel free to contact us if you have any
questions or comments about this article.
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