Show Me the Money! – Accepting Online Payments on Your Website
This article shines some light on the process of setting up an online store to accept credit card payments. After all, that’s what it’s all about, isn’t it?
When developing an online store, few people consider exactly how they will be accepting payments. They might think, “Just put your credit card details in, right?” But there are numerous options and pitfalls to consider when deciding to accept online payments.
Let’s talk about a few common payment methods:
- Internet-based Payment Solutions
- Bank Merchant Accounts
- Alternative Currencies
Each have their own specific terms and benefits and you will need to consider your current situation. For example, a payment method that’s suitable for a start-up business may not be right for a large and well established business.
The comparison of methods will largely differ in the following areas:
- Setup costs
- Ongoing costs
- Cost per transaction fees
Internet-based Payment Solutions:
There are a number of Internet-based payment solutions which typically have all the necessary payment functionality, card authentication, and security measures ready to go. Your money essentially is up in “the cloud,” not at a physical bank. For this method, all you need is an account to be up and running. These services are usually free or cheap to start, but come with fairly weighty transaction charges.
Paypal is among the most popular internet payment services, but others include Authorize.Net, Google Checkout, Amazon Payments, Dwolla, Stripe, Braintree, Samurai by FeeFighters, WePay, and 2Checkout. All have their own special combination of setup, transaction fees, and volume-based discounts.
Pros of Internet-based payments:
- Easy setup, generally cheap (or free) to get started
- Familiarity – many of the larger payment brands are widely used and trusted which will lend credibility to your own site.
- Many of these sites also have accounts to make payments
Cons of Internet-based payments:
- Lack of customisation
- Can look a little “amateur” for large stores to use these systems
- Hefty per-transaction fees
- Long transfer period to get your money to a physical bank
Bank Merchant accounts – Bank Gateway vs Third-Party Gateway
Everyone knows you need a bank account to put your money into. A specific type of account called a merchant account provides the ability to accept credit and debit card payments from your customers.
To allow this process online, a “gateway” is required. A payment gateway is essentially the middleman between your customer and your bank account. Some banks provide their own gateways (e.g. CBA CommWeb and ANZ eGate), and there are also third-party providers (e.g. Eway, Merchant Warrior, and Secure Pay). Some banks piggyback using MiGS (Mastercard Internet Gateway Service).
Once you have your merchant account, your next decision as a merchant is to consider the fees and transaction charges of these gateway services and decide if you will use the bank’s or a third party’s. Each has their own terms and benefits to consider when deciding which one is right for you. Think about how many transactions you make per month, the gateway’s monthly cost, overall turnover, etc.
The features offered by third-party merchants are usually superior to the standard bank gateway and can offer benefits such as recurring transactions, batch processing, and an API to connect your custom applications. If you’re not interested in these features and if the bank offers a gateway service, then it should do the job you’re after.
Pros of Bank Merchant Accounts:
- Speed in receiving payments
- Usually lower transaction fees
- Can have an online terminal to process payments manually
- Additional functionality available (recurring payments, batch processing)
- Fully integrated with look and feel of web store, keeping customer within the site
Cons of Bank Merchant Accounts:
- Monthly fees and/or hidden fees
- Web store development and integration
- SSL certificate requirements and PCI-DSS compliance
We also need to cover what kind of money you accept. This might sound trite, but there are actually numerous ways people can pass money to you. Consider BitCoin (http://bitcoin.org/) or Litecoin (https://litecoin.org/). These forms of currency, cryptographic currency, are gaining popularity and could also provide a way for you to receive a payment.
Pros of Alternative Currencies:
- Simple transport
Cons of Alternative Currencies:
- Fluctuating value
- Real-world application is not mainstreamed
There are other factors to consider when diving into the online merchant world.
- SSL certificates
- PCI-DSS compliance if you are going to manage sensitive customer information like credit card details
These certificates are used to secure customer data when passing credit card information. They need to be set up with your website and usually incur an annual cost. They are essentially a validity stamp from an authorised certifier indicating that while inputting data via your website, it is encrypted.
This is basically a standard to enhance payment card security. It relates to the processing and storage of customer payment information. If you require storing customer credit card details, then this will be of vital importance.
Juuce Interactive has implemented numerous online stores utilising different payment gateways with customised and pre-built software. If you would like to discuss your particular situation or would like to start selling online, please give us a call and we’ll be happy to help get you up and running.