About Internet Payments and CyberCash

Accepting Credit Card Payments over the Internet

To take advantage of the Internet with a complete E-Commerce solution, a merchant's website must be able to accept and process secure online payments. In order to take credit card payments online, merchants need to have an Internet Payment Service and a Merchant Credit Card Account.

1. The Internet Payment Service, such as CyberCash, enables the merchant to accept online payments from their customers and securely processes these payments from a Merchant's Web storefront through the existing system of financial institutions and credit card processors

2. The Merchant's financial institution provides the merchant with a bank account that enables them to accept, process, and deposit payments from their customers, and delivers regular reporting based on these transactions

As these two services are critical to commerce enabling a website, don't wait until the last minute to get started!

Useful Information for Internet Merchants

• Internet Payment Services: The Basics
• Merchant Credit Card Accounts: The Basics
• About CyberCash's CashRegister™ Service
• Anatomy of a Credit Card Transaction

Internet Payment Services - The Basics

The three key qualities merchants expect in an Internet payment service are security, ease-of-use, and price performance. With the right payment service, merchants can have all three. Here are some features to consider:

At a minimum, an Internet payment service should provide SSL (Secure Socket Layer) protocol security, which encrypts the customer's payment information while it moves over the Internet so that it cannot be deciphered. But SSL alone may not be strong enough for this entire transaction process. CyberCash, for example, offers powerful triple DES encryption, as well as SET (Secure Electronic Transaction) capable encryption and authentication.

Though electronic commerce is continuing to grow at a rapid rate, shoppers are still skeptical about security, and have not been quick to trust that personal information, such as a credit card number or address, is safe to send over the Internet. However, an Internet payment service like CyberCash, with a reputation for using the strongest Internet security technology, improves consumer perceptions about security.

• Real-time payments - Why wait? Real-time "authorization" (bank approval of the sale) and "capture" (depositing and settling a payment) enable the merchant to complete the transaction immediately, without chasing down declined credit card numbers. Shoppers receive confirmation that their purchase was approved in real-time; merchants get the payment moved to their bank in real-time.

• Scalability - Merchants want an Internet payment service that can smoothly manage and support the growth of their transaction volume and their needs for additional payment features. A payment service that fails to scale with increased transactions will hold back the merchant's revenue growth.

• Installation, Upgrades and Additional Payment Features - This is a huge "ease-of-use" factor. Merchants need to be aware of the level of integration and maintenance work that the Internet payment service's technology will require. CyberCash gets high marks for its CashRegister 3 service, as CyberCash takes on the responsibility for managing and maintaining the bulk of the software on its state-of-the-art gateway servers. The installation is dramatically simplified because the CashRegister is completely integrated with the storefront solution, which also allows merchants to take immediate advantage of the latest payment services - without expensive and time-consuming changes to their website.

• Multiple payment methods - Currently, credit cards are the primary choice of payment in the United States. Yet globally, other Internet payment methods, including electronic checks and cash, have become common forms of payment. Thus, merchants across the world are likely to begin using multiple payment methods to expand their business model, the types of products and services they can offer, and the number of customers to which they can sell. Merchants should not let their payment options limit their sales options.

• Service Features and Quality - An Internet payment service can save merchants money and time with a proven technology that provides security, reliability, and built-in, easy-to-use features.

• Integration with Storefront Technology - The less technical integration needed between the storefront software application and the Internet payment service, the smaller the effort required to enable the merchant to take Internet payments, and the greater the effort invested in selling.

• Relationship with Merchant's Financial Institution - It is important that the Internet payment service and the merchant's bank operate effectively together so that they can be responsive to the merchant's business and support needs. For example, Financial Institutions partnering with CyberCash are committed to getting merchant accounts created in just two or three days for CyberCash-enabled merchants.

Merchant Credit Card Accounts - The Basics

Each Merchant Needs a Merchant Credit Card Account

Just as in the physical world, a merchant on the Internet needs to establish a merchant account with an acquiring financial institution in order to accept credit cards. Even if a merchant already has a merchant account, they may not have the type of account required for accepting transactions over the Internet. The merchant account setup process can take anywhere from 48 hours to 14 business days to complete. So move quickly on this task, as it is among the most critical to the success of the Web store.

The following are guidelines and instructions to help merchants get started quickly:

About Merchant Accounts

There are two types of merchant accounts for accepting credit cards:

1. "Card Present" Account
This type of account requires the consumer and merchant to be physically at the same location during the time of the transaction. For a card present transaction, the credit card is typically swiped through a card reader (or physical point-of-sale terminal), and the consumer signs an authorization slip, or sales receipt.

2. Mail Order/Telephone Order (MOTO) or "Card Not Present" Account
In a MOTO transaction, the merchant and shopper are not in the same physical location, and there is no card swiped or signature received. This method of payment was originally adopted for mail order and catalog businesses. All Internet transactions are treated as MOTO transactions and require a MOTO merchant account.

If the merchant currently accepts credit cards but is not sure if they have a MOTO account, they should contact their merchant financial institution. If they already have a MOTO account, see the section below on "Setting up on Account to Accept Online Payments."

Fees and Rates

• Type of products and services being sold
• Market in which the merchant competes
• Method in which products and services are being sold and delivered
• The prices of these products and services
• The expected volume of transactions
• What forms of payment the merchant will accept
• The merchants credit history

Regardless of these factors, a merchant should expect to pay the financial institution:

• an application fee, setup fee or both
• a discount rate (i.e. percent of each transaction), typically not more than 4%
• per-transaction and/or monthly fees
• large fees for research, fraud and dispute resolution
• any additional fees for value added services

Understanding Credit Card Processing Models

Not only are there many rules and regulations surrounding credit cards payments, there are many procedures and processing methods to a transaction. For example, there are two parts to a credit card transaction: the "authorization" and the "capture". And within these types, there are many processes that occur, including processing, billing, reporting, authorization, and settlement.

For more detailed information on establishing an Internet merchant account, and becoming familiar with the several components of the credit card accepting process, contact a financial institution for an overview of credit card processing models.

Before Getting Started

Ask for a merchant handbook that explains how to accept credit card payments, how to handle and resolve disputes, and how to process voids, returns and partial credits. Also understand the rights of consumers and the rights of merchants, and become familiar with address verification services (AVS) and other fraud detection mechanisms.

How to Setup a Merchant Account

Setting up the Merchant Account to Accept Online Payments

Regardless of whether a merchant needs a new MOTO account or would like to keep an existing MOTO account, a merchant should do the following to accept credit card payments over the Internet:

• Ask the financial institution if they are authorized to underwrite credit card services to merchants.

• Inform the financial institution to set up the merchant account to accept credit cards over the Internet using the merchant's choice of Internet payment services, such as CyberCash.

• Ask the financial institution to explain the details of establishing a merchant account, including the application and approval process, the fees and charges, and requirements for opening a deposit account for doing business.

• Plan for the merchant account setup process to take from 48 hours up to 14 business days to complete.

After the Merchant Account is Approved

Once the financial institution approves the merchant for online commerce, the financial institution will typically perform the following tasks:

• Issue the merchant a Merchant ID (MID)

• Issue the merchant a Terminal ID (TID)

To process a merchant's transactions, an Internet payment service typically requires specific information on the merchant's account, including their MID and TID. CyberCash, for example, only accepts merchant account information from credit card processors to ensure the protection of this sensitive data from one trusted source.

The credit card processor in this case would communicate the MID and TID to CyberCash once the merchant's account has been approved. CyberCash will immediately add the merchant bank account information into the Internet Merchant Registration (IMR) system. If the merchant has already registered for service, CyberCash will send an email indicating that the service is ready to go live upon request from the merchant. If the merchant has not yet registered with CyberCash, when the merchant uses the IMR, the pending bank account information is automatically linked during the sign-up process to accelerate the merchant's ability to "go live".

As the financial institution is processing the merchant's account and working on these tasks, the merchant can continue to integrate their storefront with the payment component(s) and register with their Internet payment service.

About CyberCash's CashRegister™ Service

CyberCash is a pioneer in the electronic commerce industry and the leading provider of Internet payment technologies and services. CyberCash enables merchants to accept secure payments on the Internet with more ease, flexibility, reliability and cost-savings than any other solution. Let's see what makes CyberCash better.

Secure Internet payments made simple
There's nothing simple about taking payments over the Internet. The software can be complex, the processes are complicated, and the technologies are always changing. But now, with the new CashRegister 3 Service, CyberCash has, once again, rewritten the rules, and knocked down the technical and financial barriers to secure Internet payments.

Easy to install, operate and manage
The CashRegister 3 Service eliminates the need for complex software, large databases, and heavy-duty processing at your merchant site. Instead, all payment operations are handled by CyberCash's own 24x7 Payment Gateway Servers.

Unlike other Internet payment solutions, CyberCash's software installation, integration and management eliminates the major hurdle to setting up a commerce enabled Web site. Using a small payment component [jt1]that integrates with the Web storefront, a merchant connects to the CashRegister Service quickly and doesn't require specialized or dedicated personnel to operate.

Automatic upgrades and scalability
With the bulk of the CashRegister's software residing on CyberCash's servers, merchants can quickly and easily take advantage of new payment technologies, standards and services as they become available - without expensive and time-consuming software changes to their site. CyberCash's unique payment architecture allows merchants to smoothly integrate the latest technologies while retaining the same interface and staying ahead of the competition. And as the size of a merchant's business and website grows, especially the volume of transactions, the CashRegister 3 Service scales with it.

Hard or soft goods
Since merchants should not be restricted to the types of products and services they want to sell, the CashRegister 3 Service handles sales of "hard goods" made via shopping baskets, or "soft goods" such as pay-for-view areas and digital downloads. CyberCash also processes recurring bill payments. Payments are completely separate from fulfillment, so merchants can deliver their goods or services to their customers any way they choose.

• Secure payment card -- Consumers select from their existing VISA™, MasterCard™, American Express™, Novus™/Discover™, Diners Club™, JCB™ or Carte Blanche™ cards to safely purchase goods and services on-line, without picking up the telephone.
• CyberCoin® -- The CyberCoin service enables small cash payments for instantaneous electronic delivery of information, products and services.
• PayNow™ Electronic Check -- Consumers can pay their bills directly via the Web, allowing billers to reduce float, cut billing costs, and forge stronger customer relationships at their own Web sites. The PayNow service will soon extend to point-of-sale check payments as well.

Merchants win by: selecting payment options that best support their business model, providing more convenient payment choices for their customers, and benefiting from more ways to "close the sale" - all on a single platform.

In addition to online transactions, the CashRegister 3 Service also supports 800#, fax and mail orders, so merchants can consolidate all "card-not-present" credit card transactions from a single interface.

CyberCash has also adopted the new Secure Electronic Transaction (SET) protocol and is incorporating it into its latest suite of Internet payment solutions. The transition to SET will authenticate cardholders, merchants and banks; assure confidentiality of payment information; ensure that messages have not been corrupted during transit; and provide for interoperability among different software and hardware platforms.

Check out the CashRegister 3 Service Today

For more information on how the CashRegister 3 Service is changing the face of electronic commerce, visit the CyberCash Web site at www.cybercash.com

Anatomy of a "Real-Time" Credit Card Transaction

Six Steps of a Secure Internet Credit Card Purchase

• The consumer selects an item to purchase on the Internet.

• After entering shipping and credit card information, the consumer is presented with a summary of the item, price, and billing information.
• The payment information is secured with industrial strength encryption and forwarded with the order form to the merchant's CyberCash CashRegister™.

• The merchant's identification information is automatically added to the encrypted payment request.

• Still encrypted, the payment request is forwarded over the Internet and is received through a secure firewall by the CyberCash CashRegister server.
• CyberCash instantaneously passes the payment request to the merchant's financial institution, which zips it on to the consumer's credit card bank to approve or decline payment authorization.

• The consumer's credit card bank sends its response back through the merchant's financial institution to the merchant's CashRegister.
• The shopper also receives confirmation of credit card approval.
• The entire authorization process takes under 20 seconds.

• The merchant delivers the item to the shopper.
• The merchant requests financial settlement, or "capture", of the transaction through the CashRegister server.
• Funds are transferred to the merchant's account by its financial institution.