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How to Accept Credit Cards on the Internet (& Increase Your CD Sales!)
Article by David Nevue - The Music Biz Academy - June 21st, 2002

Back to Internet Music Promotion 101

Adapted from '
How to Promote Your Music Succesfully on the Internet' by David Nevue.

Accepting Credit Cards - In 15 Minutes or Less
To run a successful business on the Internet, credit card acceptance is an absolute must. Unfortunately, accepting credit cards typically means setting up a merchant vendor account with a bank and incurring additional monthly costs. This makes accepting credit cards a tough call for most musicians. What makes the situation worse is that even if you accept credit cards, your monthly online sales in the beginning are not likely to exceed your monthly credit card maintenance fees. The situation is very nearly a catch-22: if you do accept credit cards, you may not cover your costs; if you do not, you will lose many customers and potential sales.

Plugging Into E-Commerce
Fortunately, there are options available to musicians that make it possible to accept credit card orders for your products without having to purchase a terminal or pay monthly “minimum” fees. In fact, no merchant account is necessary at all. The first alternative we recommend is a ‘plug-in’ e-commerce option available through CDStreet. Once you’ve signed up, they will provide you with HTML to include in your web page that hooks you directly into their e-commerce shopping cart. This creates an ‘order’ button on your web page. Your buyers can add items to this shopping cart, return to your site for more browsing, remove items from the cart and then pay when they are ready via CDStreet’s secure forms. Once the order is placed, you get an email with the customers information so you can ship the product, and at the end of the month, you receive a check from CDStreet for all of your sales. The setup is incredibly easy, and CDStreet handles the entire transaction from credit card authorization to order confirmation. There is a one-time $29.95 set up fee, but no other monthly fees to make use of this service. CDStreet simply takes a flat 20% of the sale. That means that once you are set up, you pay nothing until you make a sale. CDStreet is, as far as we know, the best, easiest way to get started accepting credit card orders without incurring automatic monthly fees.

When Sales Exceed $100/Month
Once you are doing $100 a month in product sales on a regular basis, we recommend you move from CDStreet to a different company -
CCNow.com. Like CDStreet, you use the HTML they provide you to link your web site to their shopping cart system. Also like CDStreet, when the customer places an order for your product, CCNow sends you an e-mail sales receipt telling you what item you sold and where to ship your product. Twice a month (on the 1st and 15th) CCNow sends you a check for any sales made from your site. CCNow only take 9% of your sale, but they charge a minimum monthly payment of $9.95. That means that until you are doing $100 per month in sales, CDStreet is the less expensive route. However, once you are doing over $100 of business a month on a regular basis, CCNow will cost you less. For more details on CCNow’s fees, see http://www.ccnow.com/overview.html .

The only real disadvantage to CCNow is that you can only use it to sell physical, shippable product (like CDs). If you want to sell a service, subscription, or electronic file, check out
ClickBank. ClickBank specializes in providing services for the sale of ‘non-tangible’ goods. If you’re selling access to a web site, for example, when your visitor clicks on a specially-coded link, they are prompted for their credit card information. Once approved, they are granted access to your “Thank You” page which contains links to the files or other electronic goods you wish to sell. This technology is not cheap, however. ClickBank charges you a $1 per transaction fee plus 7.5% of your order total on non-shippable goods. There is also a $49.95 one time ‘activation’ fee. There are, however, no monthly fees.

Making use of services such as
CDStreet, CCNow, and ClickBank will help you determine whether it is worth the investment to set up your own merchant vendor account at a later date. Until you do about $500 a month in total credit card sales, you’re saving yourself money, time and hassle using one of the above options. Once you are doing $500 a month in sales, it’s time to start thinking about getting a merchant vendor account.

When Sales Exceed $500/Month
The whole process of getting a merchant account is rather convoluted. The first thing most people do when researching this option is to contact their bank. If you go this route, you can expect to pay around $35 for an application fee. If you are accepted, your bank will provide you with a merchant account, and usually the software you’ll need to set yourself up on the Internet. However, when we investigated this option we found that most of the people at the bank really had no idea how to help us set up our Internet business. They were accustomed to helping businesses set up terminals at physical locations, and seemed to lack the knowledge to help us get online.

In the end, we found it far easier to use an Internet service who knows the needs of Internet businesses. After spending several weeks investigating dozens of online options, we decided to go with a company called
Merchant Card Services. Tim Mahan, the company owner, worked with us every step of the way and took what could have been a painful, complicated process and made it simple. We highly recommend him. His fees and rates are excellent!

A second option worth looking into is the
directNIC MerchantAccount service. They claim 100% approval rate and market themselves to small businesses. While we have not used their merchant account services, we have been extremely impressed with directNIC as a company through our experience with them as a domain registrar. Their support is excellent. In our mind, that makes them a worth some serious investigation.

To set up your own Merchant Vendor Account, you can expect to pay about $300 up front. Thereafter, you’ll pay monthly fees, the total of which will depend upon both the number of your transactions and the value of your sales. You can expect, in the beginning, to pay about $30-$40/month in bank fees. This is why you want to wait until you are doing $500/month or more in business before going this route. Once you exceed $500/month, your own vendor account becomes the least inexpensive solution.

Your Shopping Cart: An Easy, Inexpensive Solution
Once you have your own merchant vendor account, you will also need your own shopping cart system. Some Merchant Account Vendors will provide you with a free shopping cart solution when you sign up. However, we found these to be rather generic. So, we researched over 100 different systems on our own, focusing on inexpensive, yet quality solutions, and settled on
Mal’s E-Commerce. The price for Mal’s shopping cart is unbeatable - a mere $6 per month for an attractive, customizable shopping cart that links directly into your Internet merchant account payment gateway (the system works very well with Merchant Card Services mentioned above). It also has its own built-in affiliate program support and affiliate reporting system, something which is unheard of in a cart that is so inexpensive. And the support is fantastic. We almost always get an e-mail response within a few hours from Mal himself, the writer of the program. You won’t find much better, or less expensive, than Mal’s E-Commerce.

Your Merchant Account - A Technology Overview
The whole merchant account thing may seem a bit overwhelming. The process is not exactly easy to comprehend, especially when you are just starting out. Essentially, here’s how it works:
  1. Your customer clicks on an Order button you’ve created.
  2. The item is added to their Shopping Cart. From here customers can typically opt to continue shopping, which goes back to your ‘store’, or Check Out.
  3. Once they Check Out, they are prompted to input their name, address, and credit card info.
  4. They then Submit their info to initiate the order. This information gets sent to a payment Gateway, where the credit card number is authenticated, and the bank verifies the customers funds. This is where credit cards are approved or declined.
  5. Once Approved, the customer returns to your ‘Thank You’ page, where they are given instructions about their order.
  6. The customer receives an Order Confirmation via e-mail.
  7. The system sends you a copy of the Order Confirmation, with additional details so you can ship the product.
  8. Bank funds are automatically transferred from their account, and deposited in your bank account.

There you have it. Confusing, isn’t it? That’s why ‘plug-in’ solutions like CDStreet or CCNow are so attractive. You don’t have to worry about payment gateways, authentication processes, or buying shopping cart systems. You simply plug in a bit of HTML into your web page and you’re done. However, once you start doing a lot of business, merchant accounts save you a lot of money. It’s a real headache to set up, but once set up, you can rest easy knowing money is being automatically deposited into your account while you sleep.

What About PayPal?
PayPal is an Internet service that allows registered users to transfer money back and forth via cyberspace. It’s a very popular, especially for users of online auctions like eBay.com. What about making use of PayPal as a shopping cart solution? A couple of readers have asked us this very question, so here’s our take on it.

Like CCNow and CDStreet, PayPal offers a plug-in shopping cart solution for your web site. Once you’ve added the provided HTML to your web page, customers can click a button to purchase your product. There are no setup or monthly fees, and their transaction fee, which is only 2.9% + .30 cents/transaction, makes PayPal a very affordable and attractive solution. When a customer makes a purchase, the money gets automatically deposited into your bank account. You don’t have to wait for a check.

The only reason PayPal doesn’t get our highest endorsement is that in order to purchase a product, customers have to first create a PayPal account. Though the process of creating an account is integrated fairly well into the PayPal cart, it’s just one more step the user has to take before actually handing their money over to you. The PayPal aspect of the cart may be confusing for some first-time buyers. It’s really important not to confuse your buyers!

PayPal does offer a good shopping cart solution for those without merchant accounts, and the low fees do make it worth some serious consideration. You may want to experiment with PayPal’s solution to see how it works for your own visitors. We have not pursued it ourselves due to the nature of the cart.


David Nevue is the founder of The Music Biz Academy. He is also a professional pianist, recording artist, full-time Internet musician, and author of the book, "How to Promote Your Music Successfully on the Internet."

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