Shopping cart basics

Revision date: Dec 14, 2005

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Types of shopping carts

Merchant service shopping carts

One of the main requirements to organize the order processing is to obtain your own merchant account and payment gateway. A merchant account allows you to process credit card transactions. As for payment gateway, it makes possible to perform this operation over a secure connection. There's no problem if you do not own a gateway or a merchant account yourself as it's possible to use the merchant account and the gateway of a merchant service shopping cart (the price in this case increases a little).

Merchant service is fine for the companies who are new in business and do not receive a lot of orders. It will store and collect your clients' information and provide you with the payment gateway and the merchant account. The weak sides of such an approach are the following: first of all, most of merchant services collect a setup fee around 100 or 200 USD. As for transactions, each one will cost between 40 and 80 cents plus 6-8% of the payment sum. That's quite expensive, especially comparing to the commissions you pay having your own account. Another problem is that your clients' credit card statements will contain the merchant service title but not your company name. There are cases when buyers cancel the charge as they are unable to recognize it.

Merchant service shopping carts are managed through the administration area. After login you are provided with the interface to manage product catalogue (add, remove items and edit their properties), define and change prices and so on. The HTML code generated by the card should then be inserted into the corresponding pages of your site (it could be "Buy" links or buttons near the product descriptions or anything else). After clicking the link your visitor is redirected to the merchant's site where he is to enter personal data and credit card number.

As mentioned before, this fact indicates to the visitor that you're a small business and some clients would rather leave to some other destination instead of dealing with (and providing CC number to) an unknown company.

So it is often a better deal to obtain your own merchant account and prefer a hosted shopping cart (requiring little or no programming at all) or a fully integrated shopping cart (programming is necessary in most cases).

Hosted shopping carts

The hosted shopping cart seems to be a reasonable deal for the small and medium business with revenues of 1,000 USD/month or more not desiring or not having enough resources to buy and customize a fully integrated shopping cart for their needs. At the same time, these solutions are similar to the merchant services as they also contain an administration area where you have to enter your product information and insert the generated HTML code into the product pages of your website.

Still, remember that you'll have to face similar problems with the hosted carts as you would with merchant services. The visitors will be redirected to another site to fill in a form with their CC information. However, some of hosted carts provide the configurable user interface so it could look the same way as your corporate sites. Some programming work may be needed still but this way your visitors could be prevented from abandoning the checkout process as the interface and color scheme stays the same.

The most important difference between these two types of shopping carts is that in case of hosted carts you're allowed to use your payment gateway and merchant account so the client's credit cart statement will contain your company title, not the title of merchant service. This can prevent numerous chargebacks.

If your monthly revenue exceeds 1000 USD then the hosted solution may be more reasonable comparing to the merchant services. Merchant account's monthly fee is usually between 30 and 50 USD, the fee for each transaction varies from 10 to 50 cents plus 3-4% of the payment sum. The shopping cart service will also charge around 20-40 USD/month. At first sight is seems more expensive, but with increasing sales it's cheaper to pay fixed fees monthly rather than to be charged for every transaction.

Fully integrated shopping carts

The fully integrated shopping cart is the best possible decision for those who can afford it. It will have totally configurable user interface and also provide you with some extended features that won't be found in other types of shopping cart software. It's possible to make discounts, allow ratings and comments from your visitors, define product categories and subcategories, calculate shipping costs without the need to create customer account and much, much more. Integrated carts may require some good programming skills and can be used with merchant account that you own or rent.

The shopping cart you'll choose will be the crucial point of your online business. The more professional your store looks, the more customers will be attracted and remain your clients for a long time. Search thoroughly before making the final decision.