Accepting Payments Online – Understanding Payment Service Providers
In order to accept payments online, your eCommerce website needs to be linked to a secure payment gateway or payment service provider (PSP).
Show Me The Money!
A secure payment gateway is used to capture an end user’s card details and then send the information to a central banking system whereby the details are checked and confirmed or denied (depending on status of account). All of the details are sent electronically and encrypted (using secure socket layering or SSL) to ensure that it is secure. Most payment gateways and PSP’s send the data using a minimum of 128-bit encryption which has become the industry standard.
After the customer orders a product/service and their card is authorised, the money is collected from the customers debit/credit card and held at the merchant for a few days. After this period, the money is automatically sent directly to your nominated bank account in a ‘settlement’. This means that you will receive bulk payments which relate to more than customer at a time which can get a little confusing, but you will get the hang of it!
Most UK banks offer payment gateways, but some PSP’s require your business to have an Internet merchant account setup (similar to a merchant account for a PDQ machine) with your bank. A couple of examples of these are RBS WorldPay and SagePay or if you do not have a merchant account, you can use other payment gateway’s like PayPal Standard. An important note is to ensure that your website is PCI compliant when accepting online payments.
Keeping Track of Costs
Payment service providers generally charge commission or a standard charge per transaction. As an example, SagePay (previously known as PROTX) offer a service where you pay £20 per month and can get setup online without any more transaction charges at their end (providing you stick below their transaction levels). At the banks end, if you choose to setup an Internet Merchant account your bank is likely to charge you a setup fee, a recurring monthly fee and/or commission for each transaction for the privilege – so it pays dividends to do your research before commiting to anything.
If you want to try and cut down on costs as much as possible, you can skip the Internet merchant account with it’s initial setup fee and head straight for PayPal Payments Pro. This service will let you to receive payments online with a monthly fee of £20 plus a transactional charge of between 1.9% and 3.4% depending on your sales volumes.
With most PSP’s like SagePay or PayPal, you can choose if you would prefer to use their payment pages and SSL certificates (which follows their branding) or use your own SSL certificates and take payment on your website. Both are still highly secure, but offer different levels of integration. For Strawberrysoup’s larger traffic eCommerce websites, we always recommend using self-hosted SSL as it looks more professional and can help increase conversion rates as you stay on the same website.
This article only covers the basics but rest assured, no matter how big or small your business or eCommerce website is, there is a payment service provider that will suit your requirements. The chosen solution should be based on setup costs, fees, value add services like fraud monitoring and make sure you future proof your website. The chosen solution should be able to cope in 2 years time as switching is a long an arduous task – and not recommended.
If you would like to know more about accepting payments online through an eCommerce website, feel free to email us at firstname.lastname@example.org or call 01243 373444. On a slightly seperate note, if you are looking for some great debit/credit card logos – check out the web design blog who have a beautiful (and free!) collection that you can use.