E-commerce stores often experience their highest takings of the financial year in the lead up to Christmas.
As a small business now is the perfect time to take advantage of the huge growth in online retail by setting up your own e-commerce site. Obviously there are many things to consider when building your site, making it user-friendly for customers is vital to its success and how you enable them to pay is an essential part of this.
In order to help you understand the implications of trading electronically we have devised a simple checklist:
Internet merchant account
As a merchant, in order to sell online you will need an internet merchant account. This account will be used to authorise, process and settle payments from your customers.
This is basically a terminal for the internet. Gateways are secure sites that link to your e-commerce check-out. Similarly to a standard payment terminal your consumer enters their card details, the payment is submitted for authorization and once approved, customers receive an electronic receipt. As are not capturing customer card details directly on your website, payment gateways greatly reduce any security risks.
Payment Card Industry Data Security Standard
In order to protect against fraud and other money related crime it is vital to make your business compliant with industry regulations. It is a mandated requirement by the payment schemes (Visa, MasterCard) that every business that accepts, transmits or stores cardholder data MUST comply with.
When considering your payment gateway it is crucial to ensure your provider is “approved” by your acquirer – the organizations who process your payments. The acquirer will often charge a monthly fee for a “bundle” of transactions or a certain amount (usually a few pence) per transaction.
Once you have considered payment gateways it is also important to look into the costs involved with ecommerce transactions. Where merchant services are concerned cost is calculated on each transaction and can vary from transaction to transaction, but roughly speaking the average business will pay £1 a day in charges.
Simply put, it breaks down like this:
BASIC RATE (cost to process the transaction)
+ PREMIUM CHARGES (processing costs for transactions that attract fees above the basic rate, if applicable)
+ AUTHORISATION FEE (sometimes called Bank 24 on statements)
= PRICE YOU PAY FOR A TRANSACTION.
Andy Macauley, Chief Operating Officer, Handepay