Processing payments in real time on your website

We often get asked how payments are processed on an ecommerce website. There are many different options and it can be very confusing when setting up a new website to know which solution is the best one. Every business is different and your needs as a business owner will differ so it is up to you to choose the best solution for your business and the way you want your online store to operate.

Before you can transact online you will need to have the following:

1. SSL (Secure Sockets Layer) Certificate - We provide a shared SSL certificate to all our website clients who are planning to sell online. SSL is necessary to ensure all information is transferred securely and in an encrypted format. For more technical information about SSL click here.
2. Online Merchant Account - Your bank will need to provide you with an online merchant account, you cannot transact online without one. Your bank will need to see your cart fully functioning before they will set up this account.
3. A payment gateway - This connects your website to a bank and all transactions happen in real time and funds are transferred straight into a bank account. The payment gateway communicates directly with the bank and the bank sends back a message to say whether the transaction has been successful.

When you have the first two organised you then need to decide which payment gateway you are going to use. You have a few choices:

Use your bank’s merchant services

All of the major banks offer a hosted payment gateway service which will allow you to process your payments in real-time. In our experience we have found that most of the banks offer a payment gateway that takes you away from your website, to a payment page to make the purchase and then back to your website when the transaction is complete. We have found that this can lead to cart abandonment and confusion when a customer is suddenly taken to another website which doesn’t match the design of your own site.

Another potential drawback to using your bank for your payment gateway is the “Verified by Visa” or ”MasterCard SecureCode” service which has been introduced to cut down on credit card fraud. Although in theory this is a great initiative it can lead to cart abandonment or the loss of a sale because some people don’t always remember their password nor have it available to them at the time of purchase.

Not all of the banks merchant services force you to leave your site, more and more the banks are offering an” API” (application programming interface) alternative which keeps  customers on your site and processes the payment behind the scenes.

Obviously the big advantage using your bank for all your business banking is the ease of communication, although Merchant Services will operate separately to your business bank account you will still only be dealing with one company rather than two.

Third Party Payment Gateway

As an alternative to using your bank for your gateway you can consider a third party such as SecurePay or eWAY. These solutions have the advantage of keeping customers on your site throughout the checkout process. Your customer enters their credit card details and everything is processed on your website. Processing payments in real time with no need to go to another site is the optimum method of payment. It gives you peace of mind that customers can and will pay and your customers know straight away that their transaction has either been successful or not.

PayPal

Using PayPal does not require a Merchant account with your bank; this is why it is often favoured by smaller businesses with fewer transactions. You don’t need to set up anything other than an account on PayPal and then have an Australian bank account for money to be transferred to.

With no set up costs and no need to fill in mountains of paperwork for your bank, PayPal is a fast and easy way to start accepting payments online.

There are a few drawbacks however; using PayPal does mean your customers leave your site to have their transaction processed. PayPal is owned by EBay and some people’s perception of this is negative. In some people’s opinion, by using PayPal it could also give the impression that you are a small company as most larger companies will have invested in merchant services with a bank or used a third part gateway. Most of the above drawbacks are based on perception, so it will be a personal choice whether those perceptions of your company are correct or relevant to your type of business.

In summary, we do recommend using a third party such as Eway or Securepay for the ease of set up and the excellent gateways they provide. In our experience of working with lots of gateways we have very few issues with these two providers. Ultimately, as a business owner it is your choice and sometimes it is easier to just stick with your bank if you have a good business relationship with them. Don’t worry though, if you find that their gateway does not suit you, you can always change to a third party or PayPal if you prefer.