Accepting e-commerce payments online

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If you’re planning to offer your customers the option to buy online, there are plenty of options to choose from, and even if you have a remotely hosted website on a third party service such as Weebly, you can still set up an online store. There are three things you’ll need to set up in order to accept online payments:

1)   Shopping cart software.

The shopping cart software is managed as part of your website, and collects the information about each purchase. You just have to create all your products in the administration panel of the software – depending on the software you use and the size of your catalogue, you can either by uploading all the products in a CSV file or set each one up manually. There are many different shopping cart options to choose from, depending on how you run and host your website, from simple online modules that you can drop into your website, to fully customisable solutions hosted on your web-server.

When a customer starts their purchase, the shopping cart captures the items, delivery options, price and the customer’s contact details, and passes this information on to the payment gateway for processing. Once payment has been received, the shopping card software will notify you with all the details so that you can ship the order.

2)   Payment gateway

The payment gateway is hosted on a secure server, and is used to collect the customer’s card details for processing. Larger merchants with access to servers that can meet the strict data security requirements will do this themselves, but most small retailers will use a third party service, such as Worldpay or Sagepay.

When the customer completes their order in the shopping cart, the transaction moves onto the payment gateway's software and servers and the customer enters their credit card details. The payment gateway then passes the transaction data into the payment network for processing, and sends a message back to the shopping cart to confirm that payment has been received, to trigger despatch.

Payment gateways usually provide the option for users to style their checkout pages to match the rest of their website, to provide a seamless shopping experience.

3)   Merchant account

An online merchant account works the same way as an offline one; the payment is sent from the card issuer to the seller's merchant account after payment has been completed through the payment gateway. The big payment gateways offer merchant account services, but although you don’t have to use a merchant account from your payment gateway provider, you should check that the options you choose are compatible.

If you’ll be taking payments online and in-person, you’ll be able to get a merchant account that offers both services. Bear in mind that online payments attract a higher transaction fee, because of the increased risk.

A bureau service combines the functions of payment gateway and merchant account provider into one: basically the bureau service holds a merchant account and makes it available to its customers. The best known example of a bureau service is probably Paypal: with a business Paypal account, you can quickly set up your website to accept card payments, and with a few basic programming skills, the Paypal buttons and checkout pages can be customised to match your website but there are plenty of others to choose from.

The convenience of a bureau service comes, of course, with a price, and although there is often no set-up cost, or monthly fee, they take quite a hefty percentage on each transaction, so they’re really only worth using for very low volumes, or for occasional, irregular sales – such as event tickets.