So you’ve decided to forego the “brick and mortar” business model and opted instead for an ecommerce Website. No need to rent physical space to display your wares, no need to accommodate shoppers’ dripping umbrellas, and no need to make change for £50 notes. You will, however, need an online payment solution.
Online payments are not just for retailers; online payment systems provide a big range of payment solutions: it is now possible to pay taxes, utility bills, membership fees, theatre tickets and countless other services and obligations via the Internet.
Your Internet transactions will fit into one of the following categories:
- One-time one-item payment (“buy now” button)
- Single payment for multiple items (shopping cart)
- Automatic billing on a regular basis (subscription)
- One-time requests for payment (invoice)
Online payment options
Online payments can be made either with debit and credit cards – which require you to open a merchant account – or through an online payment service provider (PSP) – which does not. For this article we will use PayPal as a representative PSP.
- Online credit card payments: two components are necessary to accept cards for online payments: a “payment gateway” to receive and transfer card details to your server, and a merchant account to authorize and transfer payment from the card processing bank to your account. All vendors who accept card payments – whether online or offline – must comply with PCI Data Security Standards to ensure the security of payment data.
- PayPal: online shoppers can also choose to open an account with PayPal, which transfers money from the shopper’s account to your merchant account to pay for purchases. Anyone who has ever transacted on eBay will be familiar with PayPal, whose principal advantage lies in the fact that buyers don’t need to share their card details with you to pay for their purchases.
Which online payment solution is best?
Each of these online payment solutions has advantages and disadvantages:
- Merchant service providers charge monthly fees as well as transaction fees
- PayPal charges transaction fees only
- Merchant service providers require you to sign a contract and commit to their service
- PayPal requires no such commitment
- Merchant service providers can supply you with both online as well as face-to-face transaction payment solutions (e.g., card terminals)
- PayPal offers no face-to-face payment solution
- Merchant service providers in general are reputed for good customer service
- PayPal has a mixed history in the customer service domain
It should be noted that online card payments and PSPs are not mutually exclusive. Sage Pay offers a payment gateway that integrates PayPal, while CardSave offers “virtual terminals” that can accept online payments by card or PayPal.
Cost of online payment solutions
The cost of your online payment solution will be determined primarily by your transaction volume, with greater volume generally associated with lower per-transaction cost. The best way to nail down the cost of online payment solutions is to compare the offers of leading suppliers. You can start right away with the form on this page; tell us what you need and you will receive multiple no-obligation quotes within 48 hours.