Card Not Present? The Challenges of Accepting Credit Cards Online

You might think it’s a simple process to start accepting credit cards for your estore. All you need to do is sign-up for a merchant account with your local bank and the money starts pouring in, right? In no time at all, you can be relaxing on a Caribbean beach, sipping piña coladas worry-free!

I hate to spoil your dreams, but accepting online credit card payments is quite challenging. Whether it’s the transaction fees surrounding special cash-back credit cards or complying with local sales tax, a lot of time and energy goes into setting up a full-featured shopping cart for your customers.

If you are going to implement credit cards on your own, it’s important to understand the challenges involved. Fortunately, we’ve identified seven challenges in accepting credit card payments that impact not only ecommerce, but also other departments of a business. Since these challenges are spread throughout an entire organization, it’s best to be aware of what they are and who they affect.

Challenge #1 Specialty card fees

– Want to offer your customers the cash-back Discover card?  What about the Mileage Plus Visa Card? Banks issue these cards to entice customers to use them wherever they shop, but merchants must understand that processing fees for these cards are typically higher than fees for other cards.

In some cases, an additional 1% is charged to the merchant when a specialty card is used. From an accounting perspective, it is difficult to estimate the per unit sale costs when there are thousands of different fees for different types of cards. Therefore, it’s important for ecommerce companies to meet with their accounting teams before accepting a new payment method.

Challenge #2 Regional sales tax

– Do you understand VAT rules in the UK? What about South Korea’s online tax? As your ecommerce infrastructure becomes more complex with servers and payment contracts in many countries, and overseas entities with foreign workers, your sales tax liability grows exponentially. Typically, sales tax laws are based on the existence of a tax nexus, and you’ll need to consult your legal team to make sure you’re complying with local tax collection and remittance requirements.

This is especially true in the face of ever-changing tax laws which may affect the status of your nexus from one day to the next. So before implementing new payment methods, make sure you receive the necessary input from your legal and compliance teams.

Challenge #3 Multi-currency contracts

– Have you read about the bullish ecommerce market in Brazil? At some point in the near future you’re going to want to sell your products in Brazilian Reals. What kind of prices should you set? There’s a lot more to selling in a different country than just signing a new contract with your payment provider, which may be relatively easy to do. It also requires back-end development, which involves close work with your IT department.

Invariably, your marketing team is going to broach the subject of tapping into new regional markets and it’s a good idea to accept local credit cards. But marketing teams need to be aware of the complexities involved in targeting new markets before signing contracts for new payment methods.

Challenge #4 Developer drain

– Who implements the payments in your estore? Is the person who developed the platform still around or have they left the organization and taken the original source code with them? Don’t underestimate the time required to implement all those specialized international ecommerce features that your marketing team wants.

Larger software companies can afford to throw an army of developers at any problem. But in many cases, even those larger companies don’t get it right because they are product development houses, not global ecommerce experts. If the larger companies can’t solve this problem easily, what chance do smaller to medium sized companies have? The solution is to consult your IT team when you begin to accept new credit card payment methods so that implementation is as fast and smooth as possible.

Challenge #5 Foreign transaction fees

–  Ever used your debit card in a foreign country? How do you like that 3% fee when you return home? When you accept credit card payments from across the globe, you’re exposing customers to unwelcome surprises from their local banks. Credit card acquirers are always looking for new sources of revenue and they have instituted foreign transaction fees on customers who use the card outside of the country where it was issued.

For online purchases of digitally delivered products, this can be a frustrating experience for your customers. Your customer support department will feel the impact when contacts increase due to customer complaints. Which is why it’s a good idea to inform your customer support team when your store begins to accept new types of cards. These kinds of informational updates go a long way in keeping both customers and support teams from frustration.

Challenge #6 Chargebacks & refunds

– When customers are unsatisfied with the product they’ve bought or feel that they’ve been ripped off, they contact either your customer support team or the credit card issuing bank to demand their money back. These are what we call refund requests and chargebacks, respectively. It takes highly prepared customer service agents to respond to refund requests and a dedicated payment processing team to respond to and fight chargebacks. Companies that choose to accept credit card orders must build up these resources if they are not already in place.

Additionally, refunds and chargebacks affect accounting teams who must deal with reversing sales. It’s probably something you already have in place, but direct sales in other currencies result in a rat’s nest of accounting entries when they have to be reversed.

Challenge #7 Fraud

Ever had a sinking feeling when reviewing your credit card statement and you’re sure some of those charges were not made by you? What about when you get the call from your bank informing you there are unauthorized transactions on your bank account? This none-too-pleasant topic results in the the tedious task of fraud prevention.

If you don’t have in-house knowledge, it can take years to build the necessary experience required to effectively fight a determined fraudster, a social engineering hacker, or organized crime online. Worst of all, your company’s reputation is on the line and no company can afford the bad PR associated with an incident of fraud. The fact that an estore’s success is based on “card-not-present” transactions exposes you to all sorts of attacks from fraudsters. Make sure you have a fraud prevention solution in place to avoid both a financial and PR nightmare.


While it’s true that credit cards facilitate a large part of the several hundred billion dollar global ecommerce market, they can also eat up a lot of an organization’s resources. Make sure that you understand all the challenges involved in creating a full range of credit card resources on your estore before tackling it on your own.


Credit cards are the dominant global payment method today, but due to increasing regulations and fees, managing the credit card acquiring business is much more complex and costly than it once was.

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  1. Mike

    Hi Craig,

    Nice summary – thank you for sharing. In my experience, organizations either launching a new digital commerce channel or expanding their current channel to new geographies are typically surprised by the organizational impact of evolving their online business. Especially items 6 and 7 – having a sophisticated customer service and fraud management team to handle the realities of global eCommerce, either in house or via outsourced relationship, is typically a net-new skill set for digital commerce newcomers.

    Keep up the good work,

    1. Craig Vodnik - Post Author

      Thanks for the feedback, Mike. Especially American companies can be shocked by how difficult it is to scale their current English based customer service for a European or Japanese audience. For fraud management, this is a skill that takes years to build in-house and even at that point, there’s always something else to improve your results.

      Do you have any tangible examples of companies that struggled or succeeded with a global rollout?

      Thanks for following us!



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