Being able to accept internet payments from customers is essential for any online business and so it’s important that before you begin trading, you have a system in place which can process financial transactions quickly and safely. In this article, we’ll discuss the different ways websites can accept payments and what you need to do to set your website up.
Different ways of getting paid
For the majority of shoppers, paying for goods and services purchased online is done by credit or debit card. In addition, many online customers also like to use PayPal. These three methods are going to be the main ways your customers will prefer to pay online so it is important that you are able to offer these three methods.
There are alternatives which you can also use. Although it’s becoming outdated, some websites still allow customers to pay by cheque, which can be the preferred method of people who don’t fully trust paying online. Websites that deal mainly with business to business transactions will also accept cheques and allow bank transfers, but these are mostly reserved for customers with a credit account or who are making payment on delivery.
Accepting credit and bank card payments
To accept credit and debit card payments on your website you will need to have three things in place: a merchant account, a payment processor and a payment gateway.
A merchant account is a form of business bank account that will accept payments made by credit and debit over the internet. Once the payment has been received, the money is transferred to your business current account – the merchant account itself does not accrue a balance.
You can set up a merchant account with your own business bank or through a third party payment processor – there are many third party processors available.
Merchant accounts are not free. Some charge monthly fees and most of them will take a small percentage of each transaction that you make. Rates vary and so it is worth looking around for the deal that is best for you – though it can be difficult to compare. Those that charge a monthly fee often have lower transaction rates and some of those that have no monthly fee will charge a small fixed fee plus a percentage for each transaction.
A payment processor is a financial services company that processes the payments taken on your website. They take the information sent by your customer and will deal with the credit card company to authorise the payment so that it goes into your merchant account. They will also do this in reverse to help you make refunds.
Payment for your payment processing service will usually come under the cost of your merchant account fees or vice versa.
The payment gateway is the secure checkout on your website. It is a piece of software, built into your website, that is able to calculate the cost of the items in your customer’s shopping basket, add tax and shipping costs and deduct discounts for vouchers, etc. It will then accept credit card details and security information from the customer. Most importantly, it will encrypt these so that the personal data remains secure during the transfer from your website to the payment processor.
Most payment processors will provide you with the payment gateway software that you need to install on your website. The majority of e-commerce website themes, templates and plugins enable payment gateways to be easily integrated into your online store. Read more on payment gateways, here.
PayPal is a very popular way for people to pay online. There are two main ways you can use PayPal; PayPal Gateway or PayPal Standard. PayPal Gateway is just like any other gateway and works by installing a secure checkout on your website. PayPal Standard works in a slightly different way. Instead of buying directly from your website, your customers are redirected to PayPal. Here they log into their own PayPal account and will authorise payment to you from there before being redirected back to your site. PayPal will then send confirmation emails to your customer for you, informing them that the payment has been authorised.
PayPal Standard is a useful addition to your business if you have opted for an alternative payment processor but still want customers to be able to use PayPal if they wish. Unlike merchant accounts, the money deposited into your PayPal Standard account is not automatically transferred to your business current account. You will need to do this manually or set up a transfer.
Getting the trust of online shoppers
If you sell online, it is important that potential customers see your site as trustworthy. As people get wiser to internet security, no-one is going to type their credit card details into a website that doesn’t appear genuine.
One important way to do this is to have an SSL certificate. SSL is a way of encrypting personal data that customers input into your website so that it cannot be stolen. A website with an SSL certificate can boost confidence in customers. A website without one can be flagged as unsafe by security software that customers have installed on their computers and mobile devices.
Websites with an SSL certificate can be recognised because they have a green padlock next to their web address on a browser. They also have a web address that begins with ‘https’ instead of ‘http’. You can purchase an SSL certificate from your web host.
Online consumers want their online shopping experience to be quick, convenient and safe. They want to pay instantly and their products delivered today or tomorrow. Accepting online payments by credit card, debit card or PayPal gives them the speed, convenience and security they desire. And by speeding up payment, it gives you the chance to ship your products quickly to your customers.
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