eCommerce
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Receiving payments online | Shopping Carts
If you're considering selling products or services online, then here is where you need to start. This page describes in detail what you need to start doing business online.
There are two main requirements. The first is a method to receive payments online for your goods or services. The second is a shopping cart which will enable your customers to select and buy your goods or services.
Both have several options to choose from, to suit your budget and specific situation.
After reading this you will have a clear understanding of the pros and cons of the various options, so that you can make an informed, independent decision how best to take your business online.
Receiving payments online
There are several issues to address when accepting payments online.
Firstly, you want it to be ‘real-time’: once a customer has completed the shopping part, you want them to be able to check out, pay and get immediate approval. Secondly, the transaction has to be secure so that the privacy of customer’s credit card details is guaranteed. Thirdly, the payments process would ideally be seamlessly integrated in your website so that you present a professional image to your customers.
There are two main ‘real-time’, secure methods of accepting payments online. Method 1 – Merchant Account, is more expensive and complex, but is considered more professional. Method 2 – Payment Services, is less expensive and easy to setup, but may not provide the right professional image for your organisation.
BRIEF OF EACH METHOD
Method 1.
Merchant Account |
Method 2.
Payment Services
(using PayPal)
|
Complex to setup |
Easy to setup |
More expensive unless you are doing a large volume of transactions. |
Less expensive for smaller transaction volumes. |
Funds are paid directly into your account. |
You will need to transfer the funds from your PayPal account to your bank account. |
May appear more professional to some customers. |
May appear less professional to some customers. |
Customer completes the order seamlessly within the merchants secure website. |
Customer completes the order by going to PayPal's secure website and once processed then returns to the merchants website. |
REQUIREMENTS OF EACH METHOD
Requirement
|
Method 1. Merchant Account |
Method 2.
Payment Services
(using PayPal) |
Online Merchant Bank Account
- Need to submit an application (costs about $200).
- Monthly fees: From $0 to $70
- Transaction fees: From 1% to 5% |
Required |
Not Required |
SSL Certificate
- About $100 per year |
Required |
Not Required |
Payment Gateway
- About $600 per year |
Required |
Not Required |
PayPal Business Account
- Need to open a free PayPal Business Account.
- Fees range from 1.1% to 2.4% + $0.30 per transaction |
Not Required |
Required |
Manual Funds transfer
- Need to manually transfer funds from your Payment Service provider to your bank account |
Not Required |
Required |
Method 1: Merchant Account
A Merchant Account will allow you to receive online credit card payments, directly into your merchant bank account, in 'Real Time'. This method is the more complex of the two - and more expensive to setup.
You need to set up a merchant account with your bank, purchase an SSL certificate to keep the transactions secure and need the ongoing services of a so called payment gateway provider.
We recommend this method if one or more of the following apply to you:
-
You are expecting a large number of online transactions
-
It is important to you to present an immaculate professional image on your website
-
You do not want customers to have to deal with PayPal (or similar payment service providers)
-
You want the monies deposited directly into your account and not have to do manual transfers from Paypal
Requirement 1 – An Online Merchant Account
To process online payments you will need an Online Merchant Account with your bank (Note: This is different to an EFTPOS facility since online transactions constitute a different risk profile).
Your bank will need you to complete an application form and present your online business plan. Once your application is approved you will be assigned an Internet Merchant Number which is used to receive credit card payments.
Costs:
Application fee: Approx $200.
Monthly charges and Transaction charges: These fees depend on a number of things like: a) If you already have a relationship with the bank or not, b) If you already have an existing business, c) Your industry sector, d) Your transaction volumes, etc.
Example: St. George Bank of Australia currently charge $33 to $66 per month, plus 1.1% to 4.4%. Most banks, including St. George, require you to have an Australian Registered Business.
If you would like to see the St. George Banks Terms & Conditions, Application Form and Fraud Best Practices (current at March 2007), you can download them here (you will need to unzip the file) www.diamondclear.com/ecommerce/stgeorgebank.zip.
Requirement 2 – An SSL Certificate
An SSL Certificate (Secure Socket Layer), also know as a Digital Certificate, is needed to encrypt your customer's credit card details between the merchants website and the Payment Gateway. This ensures the security and integrity of the data. The SSL protocol is the web standard used to encrypt communications, and it also performs a vital role as a built-in verification of your organisation's identity.
Side note: You can tell if a website is SSL secured if the padlock icon on your browser is displayed in the locked position.
Cost: Expect to pay about $100 per year for an SSL Certificate. Prices range from $50 to $250 per year depending on features and the provider. Just like selecting your telephone or ISP provider, you will need to shop around for the best price / feature / quality combination - we can help you in this matter.
Example SSL Certificate Providers
Requirement 3 – A Payment Gateway
Once your customers enter their credit card details, they are then sent securely (using the SSL Certificate) to your Payment Gateway provider, which is used to maintain a live link between your website and the banks payment system.
Example costs from two Payment Gateway Providers
- Netbilling - www.netbilling.com | Cost is 1.5% and 15 cents or a flat rate with no percentage, PLUS a $25 per month Gateway fee.
- NetRegistry - www.netregistry.com | Cost is $45 setup fee plus $55 per month. No transaction fees.
Method 2: Payment Service
Please note: The information provided here refers ONLY to PayPal. Other Payment Service providers exist which offer similar services to PayPal, that you may want to consider. Examples include Google Checkout http://checkout.google.com/sell and PayMate www.paymate.com.au.
The alternative to having your own merchant account is using a payment service provider like PayPal. This method is cheaper (particularly for small volumes) and easier to set up.
We recommend this method if one or more of the following apply to you:
- You are expecting only a small number of online transactions
- You want to minimize your costs
- You do not mind to look a little less professional by sending your customers to the PayPal (or similar) website to pay for their purchase
More about PayPal: PayPal is an online payment processing company (which is also know as “third party payment processing”). They offer an easy to use system that costs less for companies who have fewer transactions. PayPal is the world's largest online payment processing company and is owned by eBay.
PayPal acts as an intermediary between your customer and the merchant (your website). Payments are made instantly into your PayPal account which you can then later transfer into your chosen bank account (this transfer is free).
Important note: With PayPal your customers will be taken from your website to PayPal's website for the actual order processing (not for the shopping phase). Once the payment process is complete they return to your website. Some merchants consider this a sizeable disadvantage. In Method 1 the customer is NOT taken to a different website for order processing. You will need to consider your customer base to assess how important this is to you.
Side note: Interesting PayPal information can be found on Wikipedia at http://en.wikipedia.org/wiki/PayPal.
Features
- Complete transaction tracking and Anti-fraud protection for you and your customer.
- Multi-currency payments
- All major credit cards are accepted or bank transfer if the customer has their own PayPal account.
Cost: Fees are from 1.1% to 2.4% + $0.30 per transaction depending on your monthly total. PayPal has no set up fees and you do not require an Online Merchant Account with your bank, a SSL Certificate or a Payment Gateway.
Requirement 1 – Open a PayPal Business Account
You will need to open a PayPal Business Account (its free) to use their service.
You will need to provide PayPal with:
- Account/business owner's name & address: Email address, Business name & address, Customer service information.
- Bank details (Optional but recommended): Bank name, Account and sort code and Name on the bank account.
- Credit Card: (Optional but recommended) Credit card info and your next card statement.
PayPal website links
Shopping Carts
You need a shopping cart so that customers can select the goods or services they want to buy.This is a piece of computer software that resides on your website. You can get someone to build this for you, or choose from several more or less ‘ready-made’ solutions.
An important issue is how the shopping cart integrates into the rest of your website.
If your website is built using our Content Management System (CMS), this integration is best served by using the shopping cart module that is part of that CMS. However this is not necessary and it may well be that one of the other options best suits your particular situation. We are happy to advise you in this matter.
Table of Shopping Cart features
Feature
|
Custom Made Cart |
CMS Integrated Cart |
Commercial Carts |
Open Source Carts |
Brief Description |
Custom made cart tailored to meet clients exact needs. |
Designed for a particular CMS. Can be customised to a degree. |
Stand alone proprietary cart. More rigid in design but better support provided. |
Similar to commercial carts except they are developed by a community of core programmers |
Software cost (including customisation) |
Varies |
Average |
Good |
Average |
Ability to tailor cart to your needs |
Good |
Average |
Poor |
Average |
Free from ongoing Licensing fees |
Yes |
Yes |
No |
Yes |
CMS integration ease |
Average to Good |
Good |
Poor |
Poor to Average |
Free to use another consultancy |
Yes |
Yes |
No |
Yes |
Documentation |
Average |
Average |
Good |
Average |
Ease of future customisation |
Good |
Average |
Varies |
Average |
Product ease of use |
Varies |
Good |
Good |
Average |
Support if vendor goes out of business |
Poor |
Average |
Poor |
Average |
Shopping Cart links
Popular Commercial Carts
- Instant Store - www.instantestore.com | Cost: $600 a year. Price Includes SSL Certificate.
- EziMerchant - www.ezimerchant.com | Cost: $450 up front, plus $360 a year licence, plus Payment Gateway.
- X Cart - www.x-cart.com | Cost: $200 to $500 USD, plus SSL Certificate and Payment Gateway
Popular Open Source Carts
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