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+---- Thread: What Payment Provider? (/showthread.php?tid=29)
What Payment Provider? - webnetics - 05-02-08
When we design or set-up an eCommerce system for our clients, we are offend get asked which payment provider should we use.
There are numerous important decisions to make before you launch an online shop, such as what the website will look like, how it will integrate into your existing systems, what kind of shopping basket you will use, and more importantly, how you will take online payments from your customers.
For payment options, the things to ask yourself are:
• Which method is the best fit for my business?
• Is price the only consideration?
• Is cash flow the most important factor?
• Is it quick and easy to integrate?
• What else is there to take into account?
An existing business will probably already have 'offline' credit card processing facilities set up with its bank, but to trade online it will also need a separate Internet Merchant Account. For start-ups and new businesses, it can sometimes be difficult to obtain an IMA from a bank, and the associated checks and application process can be rigorous, lengthy and stressful.
Charges will include an initial set-up fee and monthly and/or annual fees as well as a 'cost per transaction'. You will also need a separate agreement with a Payment Service Provider or Payment Gateway. (A PSP is like a 'virtual' swipe machine service and they charge on a cost per transaction basis plus a possible monthly fee.)
Pros and cons
The pros of such a set-up are that you have complete control over your own account and your business name appears on your customer's card statements. You may be offered a choice of additional anti-fraud tools and the actual payment processing takes place within your own website, giving a professional, smooth and transparent process.
The rates are often negotiable with the bank (substantially cheaper if you're processing large volumes) and — more importantly — the funds you receive are usually in your account within three working days.
On the flipside, applying for a merchant account can take up to eight weeks, and the vetting process can be tough if you haven't got a trading history.
Online payment processing
Using an online payment processing company is often the most cost-effective and easy way for new eCommerce businesses to enter the market, as many new businesses will not have the required amount of trading history to qualify for an IMA.
It may also be more cost-effective than using an IMA if you're not planning on taking large volumes of transactions, as you won't be required to pay all the initial fees and monthly charges of a separate IMA and PSP.
When choosing an Online Payment Processing Company you should consider how quickly you receive your funds
• Do you get instant cash flow?
• Can you customise the checkout payment pages to look and feel the same as your website?
• Is it simple, quick and easy to integrate?
• How quickly do you receive your funds?
• Do you get all the latest anti-fraud tools, such as MasterCard SecureCode and Verified by Visa, known as '3D Secure' (the new online version of 'Chip and Pin') as standard — or are they extra?
• Do you have to pay a monthly/annual account charge?
• Do customers have to spend extra time logging in to the service before making their payment?
• Will you be provided with good account management and telephone support?
Easily accepted
It's easier to be accepted for an online payment account and the application process is often quicker and less vigorous. Fees and charges are often lower, and you just require one account to take online payments. It's also easy to integrate and manage, and you're not usually locked into lengthy contracts. They're certainly better for small volume merchants.
The transaction charges can be higher than that of an IMA (but not always, so check first). Depending on the company used, the payment company's name will appear on your customer's card statements, and some companies will hold on to your received funds for longer. And remember that not all companies provide the latest anti-fraud tools.
The payment gateway you choose will be dictated by your particular business requirements. While price is no doubt a crucial factor, it's also important to take into account additional features such as anti-fraud tools, design integration and cash flow. We can normal write software to integrate into any payment gateway on the market.
We will also doing a follow-up article to this, which will explain all the different payment gateways and their associated costs.