Guide to accepting payments online
8 November 2011
Bookmark and Share
 
   
Email article : Print article : More articles like this
Though high street sales may be shaky, online sales got a boost in the first half of the year, with British shoppers spending 19% more over the internet than in the same time period in 2010. Offering the option to buy from you online can improve your sales and help you find new customers, but where do you start? Read our quick guide to accepting money online.

Is selling online for you?

Though the most obvious application for selling online is the retail sector, it doesn't just have to be used for the sale of physical products. You can also sell online content, services, event registration and subscriptions.
 
Selling online can have many benefits for all businesses, including:
  • An extra sales channel that works 24/7 so you can make sales out of hours
  • Makes it easier for customers to pay you, meaning you get paid quicker – good for cash flow
  • Many customers now expect to be able to pay companies online, especially retailers
  • You'll no longer be restricted to selling in one geographical area and could even find new customers on the other side of the world
  • Businesses that switch to selling online only, save on operational costs such as rents and rates
  • Sales don't usually require your personal intervention, meaning you can get on with running other aspects of your business.

Options for taking payments online

If you want to start selling and accepting payments online, you will need a shopping cart and a means of accepting payments securely. There are a few options available to you:
 
Use a shopping website
 
For very small businesses with limited IT skills and resources, selling online via an established shopping website like eBay may be a suitable choice. Usually, all you need to set up a seller account on a shopping website is a PayPal account, so they're relatively quick and easy to set up.
 
The downside to this is that it is not hosted on your own website, so it cannot always be easily branded, which can look unprofessional. It can also be more expensive in the long run, as you will have to pay monthly fees and/or fees for listings and transactions.
 
Having said that, many entrepreneurs have built successful small businesses by selling through eBay only. Plus, some solutions, such as Big Cartel and Shopify do allow you to set up and personalise your own online shop.
 
Use a payment processing service
 
Payment processing services, like PayPal or Worldpay, act as a secure, trusted third party who will take money from customers on their own websites on your behalf and forward this on to you. You pay a standard fee per transaction for this service.
 
If you want to sell on your own website, but expect to only have a small turnover from online credit and debit card sales, and/or can't open an internet merchant account, this is a good solution.
 
You never see your customers' card details, so you have less to worry about in terms of keeping this information secure. However, you may still be at risk from fraud as, if a card is used fraudulently, you may be liable for the value of the transaction.
 
Another disadvantage is that some payment processing companies may hold on to your money for longer than others, which can affect your cash flow, so it's worth checking out their standard terms.
 
You will also need to integrate this solution into your website, which will require some technical skills.
 
Use an internet merchant account
 
An internet merchant account lets you accept payments directly from your customers on your own website. If you plan on accepting a high volume of payments through your website, an internet merchant account is the option for you.
 
These are provided by a number of banks and payment processors, which are known as ‘acquirers'. If you already accept credit and debit cards in person, over the phone or by mail order, you will already have an account with an acquirer and they can often help you to set up an internet merchant account.
 
To use an internet merchant account, it will need to be integrated with an online shopping cart, which a website development company can build for you.
 
To secure an internet merchant account, you'll need to have a good trading history, or at least a very strong business plan, plus favourable bank references.
 
By taking payments yourself, you do not have to pay any fees for someone else handling them. However, with this comes a higher standard of security.
 

Beware of fraud

Selling online is not without its risks, and you need to be aware of your responsibilities. Online payments are known as ‘card holder not present' transactions and they are more open to fraud than face-to-face transactions.
 
If you accept payments, you, your payment processor and acquirer must comply with the PCI DSS security standards. To find out more, read our tips for preventing card fraud in your business. 
 
Members of the Forum can access FREE advice and guidance on all aspects of card processing, plus an average saving of 30% on their existing card processing costs. Find out more >


Related articles