There is more to becoming an online retailer than simply taking orders and checking your bank balance. Some businesses are happy to use the services of a 3rd party payment processor such as PayPal to transfer funds from your customers bank to your own. But then some companies want to have a fully integrated payment processor. Deciding what is right for your business is not the easiest of tasks. Contact us if you currently face this dilemma and we will offer you impartial advice based upon our previous experience.

Free e-commerce solutions

One of the best free e-commerce solutions around is PayPal, which integrates basic shopping cart functions with a payment gateway and merchant account - funds are paid to you via cheque or through direct deposit. Paypal is an excellent way to begin in ecommerce and is very widely accepted around the world and does not require a separate Internet merchant account. 

You only pay a small percentage of each sale and there are no monthly fees or setup costs. We believe there are no chargeback fees to worry about.

The only drawback with free e-commerce systems is that they often do not offer the capabilities that a full e-commerce system does. For example, stock control and the ability to add discounts to products is much simpler with a full system.

Contact us so that we can explain the workload involved for various options to allow you to make a full informed decision. You will need to know the cost implications of each method. A good start is to check the Paypal charges for an option that suits you. We also advise that you contact numerous merchant account providers and payment gateway companies. Read on to find out where to start and how to get the best deal.

Internet merchant accounts

Retail stores require a merchant account. Unfortunately a separate account is required in order to be classified as an Internet merchant. This will allow your site to accept credit and debit card transactions.

This is a separate account from your business bank account and although your business banking provider can probably provide this service, it is not essential that you use the same company.

There are two options available dependent upon how you intend to trade:

• An E-Commerce Merchant Number is required for trading over the Internet
• A Multi-Currency Merchant Number may be needed for companies that wish to accept more than one currency

Although you may decide not to use your banking service provider it would be wise to start there for your first quote. Rates do vary based upon a number of factors. Such as:

• Years in business 
• Current/predicted  turnover
• Banking history

You need to show great negotiation skills here, as banks will rarely offer you the best deal after your initial application.

American Express, Diner's Club and JCB each require an additional Internet merchant account with each company directly. Other acquiring banks cannot collect payments for these cards.

Payment Gateway

A payment gateway is a separate service that acts as an intermediary between your online stores shopping cart and all the banks or credit companies involved with the transaction. This includes your business bank and merchant account. It checks the validity of the customer’s card, encrypts transaction details, ensures they are sent to the correct destination and then decrypts the responses which are sent back to the shopping cart.

There are two ways that this can take place:

• One redirects customers to the payment gateway's server for the payment to take place. This is for merchants who wish to run their own order and transaction reports on their servers, but do not wish to invest in their own digital certificate (known as an SSL certificate) nor collect credit card details on their own website.
• The second allows the payment to take place within your online store. This is recommended for merchants who wish to keep customers on their own website for the entire transaction process and/or who wish to create their own customised reports. This system is suitable for merchants who wish to integrate a payment system into existing back office payment software. This method requires a Secure Socket Layer (SSL) which encrypts and protects customers card and personal details.

The proper choice of payment gateway is another vital element where the right choice will protect your profit margin.

Due to an excellent cost structure and high level of support services, we recommend that you look at www.protx.com when looking for a payment gateway service provider. You are more than welcome to contact us for advice on what to consider.

Most of all – check check and check again

Making the wrong or a rushed decision when selecting which method to use will limit the chances of your business becoming an online success. As each of the above offers a sliding scale of prices, you will need to make sure you always check every detail.

If you miss an opportunity to reduce your payment acceptance procedure by 50 pence per transaction, 1000 transactions will cost you an additional £500. Unless you are fortunate enough to work on a 99% profit margin on each product, you will want that money to be in your pockets and not the bank managers.

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