How to take money online
Great business idea? Check. 
Business plan? Check.
Online presence? Check.
That’s it. You’ve made it. Your business’ success is but a heartbeat away; there are just a couple of quick things to sort out first… like working out how exactly you’ll take that money your customers are virtually lining up to give you.
Accepting credit card payments on your website is a necessity these days. More and more, online customers are willing to part with their credit card details for the instant gratification of purchasing whatever it is you’re selling. However, there’s more to that ‘Buy Here’ button than meets the eye… here’s a quick run down of what usually goes on behind the scenes:
- If you have a fully-fledged ecommerce website, your customer will browse via a shopping cart and then navigate to the checkout.
- Once they click the ‘Buy Now’ button, they’ll get taken to a secure form to fill in their personal and financial details (they’ll be able to tell it’s secure because the address will start https rather than just http).
- That form is then sent to an independent payment gateway service, which has the job of sending on the details to the relevant places, usually the customer’s bank and your merchant account.
- The payment gateway will then receive a notification as to whether the transaction can go ahead, at which point, if it gets the all clear, the money will change hands and you and the customer will walk away happy.
That means if you set up your ecommerce site without taking any shortcuts, you’ll need shopping cart software, a payment gateway and your own merchant account before you could take any credit card payments. Those either cost money to set up or will charge you ongoing fees and, what’s more, they all need to be compatible with one another.
Sound daunting? Don’t despair.
Fortunately, there are two things that will make this whole experience a lot easier:
- Payment Packages – Paypal is the most well-known payment method online and, for merchants, offers a sort of ‘plug in and play’ solution. It’s both a payment gateway and a merchant account (which means you don’t need to worry about compatibility issues), and it has a few features that’ll let you use it as a shopping cart on your site. Google Checkout is an alternative; it’s not quite the same as a payment gateway but it basically does the same job. Both of these systems are free in their simplest forms, but will charge for extra features and you can expect a reasonably high rate on transaction fees.
- The Internet is a friendly place and there are lots of resources for helping you work out a solution to this challenge. The best advice we can offer is to take your time and read the small print. Second to that is the maxim that nothing comes for free: if you’re offered a set up that looks too good to be true, it probably is!
“So What Should I Do?”
It really depends. If you need to start taking money right away or don’t have the cash for the up front charges associated with setting up those three parts of the payment process (ie. shopping cart software, payment gateway and merchant account), starting out with a Paypal account is probably the best option.
However, it’s most likely not the best long term plan and you should set some time aside to learn more about the payment process and find out which software and accounts are best for you and your business.
Lucy Langdon
Lucy Langdon works for Merchant Account Forum, a website that helps visitors find the right merchant account for their business, including UK merchants & international merchants.
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7 Responses to How to take money online
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I’ve noticed that as a customer I prefer the PayPal option and I tend to buy more online if it’s available.
Thanks Lucy very interesting article. I use Paypal without too many problems.
Thanks Lucy very interesting article. I use Paypal without too many problems.
I use PayPal on my websites and has been great for me
Twitter: NitaJoyDesigns
I recently found something by American Express, and it’s a subscription payment gateway similar to Paypal, will be looking into it more. I personally don’t want the hassle of taking credit card payments when the customer is not present
Sarah, thenappylady.co.uk has always taken card information with the customer not present and in 10 years we only ever had one problem.
A lot of our customers are not married or have kept their own surname. They also sometimes pay with their partner’s card (I know they are not supposed to, but the nature of our customers is that we consider them to be very low risk – as they have consistently proved). In the instance I’m telling you about, the lady paid with her boyfriend’s card and the goods were delivered and signed for by her. 18 *months* down the line, I assume they broke up, and the first thing he must have done is gone through his credit card statements weeding out and rejecting any payments she had made, including for the nappy delivery. About £200 worth.
Even though we could prove the details of every stage, including the courier’s signed delivery note, there was nothing we could do and the money was clawed back from us.
Obviously, we were gutted at what had happened, and we considered how we ought to change our procedures to avoid this happening in the future. However, ultimately I decided this was a one-off and unlikely to recur, whereas procedural changes might cause more problems than they would solve. So we didn’t change anything and never had another problem like it after that.
Apart from costs (which are exorbitant) for taking cards – £40 a month before you even get to transaction fees – we never had a problem with taking cards. I do think offering both cards and Paypal is reassuring for customers. My sales volume at TNL certainly went up once I started accepting cards, but at that time Paypal didn’t even exist, I don’t think.