Electronic Shopping Carts & Payment Processing
- A Quick Reference
From Basic Forms to Shopping Carts
An electronic shopping cart is a critical aspect of en e-commerce
business. The shopping cart is the software (or series of scripts) that allows users to select
products from your Web site, save them and check out when they are done
shopping. In the early stages of electronic shopping, the shopping cart
was usually a basic HTML form from which a customer selected the products
he wanted to purchase. Long before using a credit card over the Internet
was widely accepted, it was common to find that you would need to print
the form and mail it along with a money order or credit card information
to the company. Over time, as e-commerce grew and online stores began to offer
hundreds, if not hundreds of thousands of products, obviously a better
method for storing a customer's purchases and placing an order was
shopping cart acts as the
user-interface for the customer to shop. It allows users
to place items in a "shopping basket". The cart remembers these
items for a predetermined length of time, usually 15 to 30 days unless
the shopper removes the items from the cart. Today's shopping carts are
really designed for the ease-of-use of the shopper.
Extra features such as different color or size options, quantity of
order, and matching item links can be integrated into the shopping
cart. Once a shopper enters her shipping address, taxes and shipping
costs can also be tallied from within the shopping cart. For the
merchant, the shopping cart also provides important information, which
is often transparent to the shopper, including a cart number to track the
order, and even a cookie to provide you with some limited tracking details
about your customer.
Within the genre of shopping cart
software, merchants have many options to choose from. Some
shopping cart software is designed to run on your own Web server, while
others may run on the application provider's (hosted) servers. It is
important to remember that a shopping cart is just one part of the
e-commerce Web site, and as a stand-alone tool it usually will not provide payment processing. Once the customer completes her "check-out", the shopping cart delivers the order to the
payment gateway, the service that automates the payment transaction between the
shopper and merchant. Shopping carts are not storefronts (although they
are integrated into storefronts, which we will discuss later).
Some key factors that you will need to
consider before choosing a shopping cart include the following:
- Hosting does this software run on
your Web server or is it a monthly service provided by the vendor?
- Can you change tax and shipping
information, and does it keep a running tally for your customers?
- Does it provide currency conversion
for International shoppers?
- Does it support different language, so the same cart can be used on your Web site, if offered in
languages other than English?
- Does it offer easy-to-use features
for customers such as multiple image views, product search, size or
color selection, matching item selection from within the cart?
- Can the cart accept customer
promotional codes, and discounts at check-out?
- Does it require any special
technologies (e.g., Java or ActiveX), which may not be running on all
- How much does this provider charge
for a set-up fee, monthly fees (if applicable), and transaction
- Does the cart software allow you a
set number of products or unlimited listings?
- Which types of credit cards and
forms of online payment services are accepted with this software?
- If included, is the credit card
authorization an automated or manual process for the merchant?
- Can the client information be
attached to a mailing list, promotions list or gift registry?
- Does it offer multiple design and
layout templates that allow you to integrate the look and feel of
your store into the check-out process?
- What types of product/item database
does it support (e.g., is it compatible with your existing database)?
- Does the cart software allow for
scalability in that it is flexible enough to grow with your,
hopefully, growing online business?
Finding Shopping Cart Software
Yahoo! Electronic Commerce Software Directory is just one of many
places where you can find lists of E-commerce Shopping cart software (a
Google search will provide some excellent sources as well). A good way
to start your search is to look through some shopping carts online and
start a list of the features and functions you see, that you feel would
be important in your own cart. Additionally you should consider if you
plan to host the cart yourself, or use a software provider for the
service. Use the check-list above, and read the "features" pages from the
software cart vendors Web pages. From there, do
product specific searches and to view the cart in use on other store Web
sites. Looking for product reviews of the software can also help narrow
you narrow down your choices. While there are simply hundreds of
shopping cart software packages available
. knowing your requirements
will soon limit the choices and make deciding on one product much
How Payment Processing Works
Before being able to accept credit card transactions and other forms
of online payments, a merchant
will need to set up a
merchant account with a bank. A merchant account
is the industry term for a business banking relationship whereby you and a bank
have arranged to accept credit card payments (usually, a local bank can
suffice for this kind of relationship). Setting up a merchant account
usually involves the bank understanding your business and working with a
third-party processor to arrange a mechanism for accepting payments. For
more information on setting up merchant accounts, we recommend you take
a look through the
at ECommerce-Guide.com to
get you started in the right direction.
As mentioned previously, once the customer checks out with the items in
her shopping cart, the order also has to be verified for payment.
This task is performed by the electronic payment gateway a third-party
service that is actually a system that processes,
verifies, and accepts or declines credit card transactions on behalf of the
merchant through secure Internet connections. The payment gateway is the
infrastructure that allows a merchant to accept credit card and other
forms of electronic payments via the Internet.
When a merchant submits a payment
transaction to the payment gateway (on behalf of the customer) it is
sent through a secure connection from the Web site. The customer will
simply submit his order, and will then see some type notification that
the order has been submitted on the next screen. Behind the scenes
however, there is a lot more going on. The transaction
information is actually routed from the Web site to the merchant's bank processor, which submits
the information to a
Card Interchange. The Credit Card
Interchange is the organization responsible for managing processing, clearing and settlement of
credit card transactions. The Credit Card Interchange then routes the
transaction to the customer's credit card issuer where it is either
approved or declined based on the balance available of the card. If the
transaction has been approved, the funds are re-routed back to the
Credit Card Interchange, who provides the merchant's bank processor with
the transaction results. The transaction again goes to the payment
gateway, which is responsible for saving the information and sends the
results of the transaction to both the customer and merchant. In the
final step the Credit Card Interchange sends the funds to the merchant's
bank for deposit. While this payment processing routine may seem
lengthy, the whole process would normally be completed in a few seconds.
From the merchant's perspective you need
to ensure certain criteria are met before you can accept credit card and
other forms of Internet payments at your electronic store. Other than
the obvious (such as a Web site and products to sell), you'll need to
ensure you have a merchant account with a financial institution, and
that you have selected an appropriate shopping cart software as well as
a payment gateway to handle the transaction.
Integrating Carts & Payments into
For merchants not interested in the research, design and implementation time
requirements, there are many storefront services available. A
storefront is the commonly used term to describe a complete electronic
commerce solution for merchants. Storefront service providers (also
Merchant Service Providers) are able
to provide a complete solution which may include some of the following
. depending on the specific storefront provider's services:
- Web site design templates or design
- Web site design tools
- Web site hosting (including disk
space and bandwidth)
- technical support
- SSL security
- Web analytics
- shopping cart
- sales reporting
- catalog generator
- inventory control systems
- order and shipping management tools
- shipping calculator
- built-in secure payment gateway (you
will need to setup an account with the payment gateway being used by
the storefront host)
- The capability to upgrade plans as your
By paying monthly or yearly user fee and
a set-up fee, storefronts offer merchants without Web design and
electronic commerce experience a way to get started. Be warned however,
that these types of total solutions can be limiting in that you may
not have a choice of payment gateways, and that high traffic Web sites
may have additional hosting fees to pay. Usually, when setting up a
storefront account you will pay a one-time set-up fee then pay monthly,
based on a selected plan often with predetermined
bandwidth, limits to
the number of products you can list, or a set number of monthly
Once you weigh in all options, a merchant
will need to have a merchant account, some type of shopping cart
interface, and an account with a payment gateway to accept credit card
and online payments on their Web site. With the electronic commerce
industry growing by the day, so it seems, merchants can choose
from a variety of software providers and third-party vendors to create a
system that best suits their online business needs.
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Vangie 'Aurora' Beal -
Last updated: June 09, 2005
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