One of the most important features of any eCommerce site is the ability to accept payments from customers. Without it, you can’t trade, so it is crucial that this is set up and integrated into your site before it is launched. In this post, we’ll look at the payment options available to you and what you need to do to get your online business ready to trade.
To give your business the best chance of succeeding, the payment options you provide must enable as many customers as possible to purchase from you. This means you will need to accept debit cards, credit cards and PayPal, which are the three most popular ways people like to pay online.
Although used less frequently, there are other payment solutions you can use if you wish. You can, for example, accept payment by bank transfer, which is an option available at a number of larger stores, like Amazon. For users on smartphones, another alternative is to let them pay by mobile wallet. Finally, you can always let customers send you a cheque or pay cash on delivery.
Taking payments from debit and credit cards
In this next section, we’ll look at what you need to do to accept card payments on your site. There are three things you will need to set up, a merchant account, a payment processor and a payment gateway.
Opening a merchant account
Standard business bank accounts won’t let you take online payments from debit or credit cards, so before you can accept them, you’ll need to open a separate merchant account. A merchant account’s only function is to take online payments, once these have been paid, the money is instantly transferred into your normal business account.
There is a wide range of merchant accounts available and there is no necessity to use the one provided by the bank you have your business account with. Indeed, choosing a different provider might be preferable, as you have to pay to use a merchant account and your own bank’s fees might not be the most competitive around.
Merchant account fees are difficult to compare as some providers charge a set monthly fee, some take a percentage of the value of each transaction, and some do both. You’ll also find that costs vary, so it’s always beneficial to shop around for the best rates.
Choosing a payment processor
A payment processor is a third-party business that handles the financial transactions between you and your customers. It makes sure that payment takes place by relaying the payment information, i.e. debit card details, from the shopper to your merchant account. Part of this process will involve communication with the customer’s card company to authorise the payment. Payment processors also work in reverse, enabling you to make a refund and ensuring the money goes directly back into the customer’s account.
Although payment processors are separate companies from your merchant account provider, the fees for their services are often included in those of the merchant account. Popular payment processing companies include PayPal and Square.
Setting up a payment gateway
A payment gateway is a piece of software on an eCommerce website that carries out a number of important functions:
- it calculates the cost of the goods in the shopping basket
- adds any VAT
- calculates the right shipping costs from the options chosen
- deducts any discounts from codes or vouchers
- takes and encrypts customers’ card details and security information
In many cases, the payment gateway is provided to you by your payment processor and you will need to install it on your website. If you use CRM software, like WordPress, to create your online store, you’ll find most e-commerce themes and plugins are designed for easy payment gateway integration.
If you accept card payments of any kind on your website, you will need to take measures to ensure that customers’ financial data is kept secure during the transition from your site to the payment processor. The way to achieve this is through obtaining an SSL certificate. An SSL certificate encrypts card details and other data so that even if it is intercepted during the transition, it cannot be accessed and stolen.
The other value of an SSL certificate is that websites which use them have the green padlock icon displayed on users’ browsers to indicate that your site is secure. This gives customers increased confidence in buying from you, which is especially important if you are a new company aiming to attract customers for the first time.
PayPal is an extremely popular payment option for online shoppers and websites alike. It is also highly trusted, which is good news for those eCommerce businesses that offer it. Companies have two choices in how they can use PayPal, these are PayPal Gateway and PayPal Standard.
PayPal Gateway acts like other gateways and works by installing a secure checkout on your store, enabling you to take payments from debit and credit cards. PayPal Standard, on the other hand, operates differently; instead of taking payment on your website, customers are transferred to PayPal’s own site and pay from within their own account before being sent back to your site. One difference between the two PayPal options is that monies received from PayPal Standard do not get transferred to your business bank account. Instead, they are deposited into your business’ PayPal account.
You cannot set up an online store without the ability to take payments. Hopefully, the information provided here will have helped you understand the things you need to do to accept debit and credit cards and PayPal payments on your website and to make sure that your customers’ transactions are secure.
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