With a large proportion of sales now online, ecommerce is more important than ever. But few businesses can – or should – create their own ecommerce platform, and with many companies vying to help, you need to know the things to look out for.
Online payment systems are usually the most vital, and vexing, part of ecommerce, and so it is essential to choose the right partners when establishing yours. You want customers to have a simple, hassle-free buying experience; as much of their money needs to make it into the business' bank account as fast as possible; while security is critical.
Generally businesses operating on the web need a business bank account, an internet merchant account and an online payment gateway account. Usually the merchant account will be provided by the bank that provides the regular bank account. On its own, the merchant account does not allow you to take card payments. For that you need to choose between using a card-swiping machine or an online service.
Online payments hints and tips
Consider the following points when choosing an online payment gateway:
1. How much commission does the payment gateway take from the earnings, before it transfers it into the merchant account? The merchant bank account will also levy a charge for each credit and debit card transaction - something that is particularly worth remembering when selling low-priced goods.
2. What are the hidden costs? Check out how much it will cost to refund a customer. Investigate the scale of the commissions. Most companies, including WorldPay, PayPal (TM), Protx and SECPay decrease their charges as the number of orders increase. Some, like Protx, charge a monthly fixed fee. Calculate how many transactions you are likely to make per month before choosing the most efficient price plan.
3. How long does the payment gateway hold onto incoming funds? Some will hand over the cash within 24 hours, while others (notably WorldPay and some high-street banks) have a so-called 'remittance delay' of four weeks. SECPay currently takes 48 to 72 hours.
3. Consider if a full-scale ecommerce system is really necessary in the early stages of the business. Is it possible that an eBay shop or Amazon partnership will do? When orders reach a certain level it will make sense to change over. Keep monitoring order levels and costs per transaction to ensure that the change happens at the right time.
4. If choosing a web-based ecommerce service, like Actinic, note which payment services it is compatible with. Some will allow offline credit card processing, where the credit card numbers are sent in for manual processing using a card swipe machine.
5. Choosing a payment company that provides a virtual terminal lets businesses enter credit card details into a web-based system, which is ideal for processing fax and telephone orders, as well as small numbers of internet orders. Because the system can be used simultaneously by multiple employees, it will scale with the business.
Getting started check list
a) Sign up for an internet merchant account.
b) Choose a payment provider
(eg. WorldPay, PayPal (TM), Protx or SECPay).
c) Set up the payment provider account.
d) Connect the website's ecommerce system to the account.
e) Test orders to iron out the bugs.
f) Make the account live and start trading.
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