 Introduction When customers make a purchase from you online, what is the best way for them to make a payment? Making payments online instantly brings up the issue of security with many customers today, however, promising figures for online sales is proving that this is becoming less of an issue. Traditional Methods You may decide to offer the traditional payment methods such as allowing the customer to send you a cheque or postal order. If you are to set up an online payment system (detailed in the next section), it is usually good practise to give your customers the option of paying using such traditional methods. This will encourage more sales if customers are reluctant to paying online.
Online Payments & Merchant Accounts
(i) Online Forms - Secure Servers
A common method of paying online is to set up an online form which allows the customer to enter their bank details or credit/debit card number so that a direct debit can be arranged. To get the trust of the customer, this procedure must be secure as possible to prevent online theft and fraud.
Services are available that allow you access to secure servers and payment forms which are highly encrypted. For example, a customer would fill out a form accessed on your website (which is hosted by the service provider) and when the details are submitted, the details are stored on the service provider’s server. You would then access the service provider’s server to retrieve customer payment details.
(ii) Merchant Accounts
The majority of Internet businesses now have online systems to charge customers at the time of purchase. Such systems allow customers to enter their credit/debit card details on request: the payment is then charged instantly from their card. This is arguably the most efficient way of making payments if you have an Internet business, as it reduces the amount of administration and clearance delays that are involved with offline methods (cheques, etc).
This method involves the use of a merchant account. A merchant account is a special account set up with a bank or institution that will accept credit/debit card payments on your behalf. When a customer makes a payment online with their credit/debit card, the amount is charged and credited to the merchant account. You – the merchant – will be credited (to your bank account) with the account balance at regular periods (i.e. monthly) or when the account reaches a certain amount (i.e. £100). Some merchant accounts will allow you to credit funds to your account on request.
Merchant accounts providers will usually charge an initial set-up fee and an on-going monthly charge. There is also usually a small (but not significant) charge on each credit/debit card transaction.
In the past, merchant accounts were hard to obtain, but increasing demand and relaxed restrictions have made it a lot easier to obtain one today. Contact your local bank for more details on their merchant account services (if available) or visit the following merchant account provider website:
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