Accepting online payments: key steps

Ben Dyer of ecommerce supplier Actinic looks at how businesses can set up an online payment system

In my job I come into contact with a lot of online businesses. And although the range of websites is staggering, there is one common factor: they all have to be able to take accept online payments.

Figuring out how to accept online payments can be a daunting process, especially for a new online shop. There is a lot of jargon, bureaucracy and confusion about how to get started.

Easy payments, but big fees

PayPal is a third-party payment system that can process online payments for you. In the years since its launch, PayPal has become one of the most successful online businesses of all time. People have huge trust in the brand and it’s incredibly simple to set up. To me, every online shop should accept payment by PayPal, regardless of its size.

The downside to PayPal is the fees. As a rule, PayPal charges three per cent per transaction. This may not sound a lot when you are starting out, but it can become fairly painful in the long run, especially if you are successful.

Taking PayPal payments also means you have to pass customers across to the PayPal website in order to make payment – which can affect the customer experience on your website.

Get control with a merchant account

Eventually, everyone selling online wants to take more control and accept online card payments directly. This allows you to create a seamless experience for customers, who no longer have to be passed to a separate website to make payment.

To do this, you need an internet merchant account (IMA). If you come from a traditional retail environment (perhaps you run a High Street shop), you may already have a merchant account.

If not, your first step should be to contact your existing bank. This is often the quickest, most cost effective way to get an IMA.

Once you are set up with an IMA, you need to sign up with a payment service provider (PSP). Well-known PSPs include RBS WorldPay, Sage Pay and my own company’s Actinic Payments.

The PSP is the bridge between your online shop and your bank. Think of it as an electronic till. Check how well your chosen PSP will integrate into your website and see whether it offers additional features such as anti-fraud measures.

Are you PCI DSS compliant?

The Payment Card Industry Data Security Standard (PCI DSS) is a worldwide standard created to help prevent credit card fraud. If you hold, process, or exchange cardholder information, it’s important you are compliant. Breaching PCI DSS carries heavy fines that could put many small companies out of business.

However this needn’t be a huge hurdle. If you are using a PSP, it’s the PSP that has to be PCI DSS compliant, not you. They have all the headaches of staying compliant, and your systems hold no sensitive payment data.

Related articles include:

• Setting up an online payment system
• Choose an e-commerce system
• Secure your online shop