In any business, you can make more sales if you are able to accept credit cards. At the consumer level, credit cards are the number-one tool of e-commerce. Credit cards provide buyers with certain levels of protection when making purchases from online merchants or auction sites. Credit card users are more likely to make impulse bids or impulse purchases while roaming around online auction sites, and bidders in other countries can overcome currency differences by using a credit card.

PayPal provides the easiest way for an auction seller to accept payments from credit card holders. Winning bidders can pay for their purchases with MasterCard, Visa, American Express, or Discover or use the eCheck option to pay with an electronic check. Many online merchants and auction sellers who accept credit cards directly also accept payments through PayPal, because of the service's growing popularity.

If you expand your business into an online store with an inventory and access from the Web, you will likely want to accept credit cards directly. To do this, you need to establish a merchant account and choose a gateway, which connects you to the transaction clearinghouse and verifies that the credit card is good. Three types of gateways typically are available for merchants: (1) credit card swipe machines, such as you see at restaurants, doctor's offices, grocery stores, and retail stores; (2) desktop software; and (3) real-time Web gateways.

The traditional advice for setting up a merchant account in a small business is to go, hat in hand, to your bank, and then look for other possibilities if they say no. A number of online companies — such as Charge.com, MonsterMerchantAccount.com, or Merchant Accounts Express — now offer merchant accounts, and you can apply in a matter of minutes. Fees, services, and restrictions vary. You should carefully research several merchant account providers before choosing one.