If you want your customers to be able to buy stuff from you and pay online, then you'll need to make credit card transaction one way or another*. There are about four ways that you can do this, each with their pros and cons.
Whichever way you choose, it's almost always the part of setting up an eCommerce outfit that takes the longest. It just always does. You either have to prove who you are to Paypal or Google Checkout, or get a merchant facility with online 'customer not present' payments from your bank. Either route takes time - allow up to a month. I know. A month. It often takes less time to build the store than get the payment stuff in place.
* I am ignoring bitcoin and other alternative eCurrencies until they become a bit more mainstream. What are my options? Broadly speaking:
PayPal,
Google Checkout,
SagePay and
WorldPay.
There are a host of minor providers, but these are the big ones.
PayPalEasy to set up, people are familiar with it, but comes with issues around customer service. Because it's a mass market service, they have real problems with preventing fraud, so will tend to shut down accounts that exhibit unusual behaviour. So, if you get a big sales spike because your latest product video went viral then PayPal may shut down your account because a big jump in transaction numbers may indicate fraud. And then you are left to deal with PayPal customer support, which appears to be one little old lady in a broom cupboard with a bakelite telephone somewhere in the Arctic circle. OK, the risk is small, but the impact is huge. This has happened to people we know.
In its favour, it doesn't require you to get any special facilities from your bank. The downside to this is that they charge higher commission as a result. Watch out for its
fee structure.
Both SagePay and WorldPay also offer a 'pay by PayPal' option on top of their own payment stuff, so you don't have to choose 'either/or'.
Google CheckoutEasy to set up, but takes quite a big lump out of your payments in commission. The same problem that you have with PayPal potentially freezing accounts is also true, but given the higher level of proof required to get the account, we haven't heard of as many problems. Unfortunately, Google customer support is, we think, outsourced to the same old lady in the Arctic circle that PayPal use. Getting redress for grievances may be difficult.
A significant difference between PayPal and Google Checkout, to my understanding is that Google automatically pays money into your bank account after about 48 hours, whereas PayPal just hangs onto it until you log in and initiate a transfer, but I may be wrong.
As with PayPal, this doesn't have to be the only payment option on your site. Adding new payment options often increases the number of completed orders.
SagePay, WorldPay and a host of smaller providers
These guys are like 'Securicor', they move the money safely between places for a fee. They usually charge a monthly fee and/or transaction fees to validate that the person's credit card exists and has funds available. If so, they take the money immediately, or reserve it (pending despatch of the item and 'release of payment' when you actually want to take the money). SagePay, for example, charge £20 a month, which covers the first 100 transactions and thereafter in £20 blocks for each 100 payments.
To work, they need to be linked with a business bank account that has the ability to take credit card payments (called a merchant account).
A key advantage to these payment providers is that they are unlikely to freeze your accounts lightly and, because you are their customer paying real money, you can actually phone them up and try to sort things out with an actual live human being! Costwise, they are about the same overall because your bank will charge you commission on the incoming payments of 1-2% or about 60p for debit cards.
Broadly speaking, WorldPay allows you to apply your styling more seamlessly to the payment process, but SagePay is more flexible to work with in terms of setting things up and better with foreigners (see below). We prefer SagePay.
Do I have to take Credit Cards? Is there no other way?
There are some really interesting developments on the horizon such as dwolla that circumvent the need for a Visa card entirely. This is a good thing and long overdue because Visa and Mastercard take far too large a chunk of your payment and can get away with it because there's no meaningful competition. Sadly, they only work in the US at the moment. We'll update this post when they come over here!
Why does it take so long to get set up?
PaypalPayPal is the quickest route, but comes with other issues (see below). Paypal need to validate your credit card and address by making a small charge against a credit card validated to your given address. When you receive your statement then you type in the special code given. You'll need to do the same thing for a nominated bank account too as soon as you reach a sending limit for money.
Google CheckoutSetting this up entails sending off audited accounts to Google, along with copies of your certificate of incorporation (for Ltd. companies) and various other bits. Google then lets you know a few weeks later when it's approved.
SagePay, WorldPay and others that need a bank account with a merchant facility. The big problem here is the banks. You'll be amazed to learn this, obviously. Honestly, it's like they are stuck in the 18th century. We've yet to see a bank completing the necessary paperwork in less than a month. No reason, just bureaucracy.
Taking and storing credit card numbers yourself like wot Amazon do. This is a complete non-starter unless you have about £15k to spend just on taking payments. We have to have all sorts of heinous security stuff in place and it's not just about software on the server, it's about making the organisation PCI-DSS compliant. Sorry, acronyms. PCI-DSS is the set of rules that the banks have put in place to make sure your organisation can process credit card payments securely. There are a lot of rules and complying with them all is expensive.
Foreigners with their funny money. Just when you thought you'd solved all the problems with taking money, some damn foreign Johnny will want to give you some money. And this introduces a new set of minor complications.
Assuming your shop supports multiple currency pricing for a moment (and ours do, obviously), then you need to make sure your payment provider does too. For Paypal, this shouldn't be a problem, at least for the obvious currencies (Yen, US$, Euro, GBP Sterling) - you may have a problem with the Azerbaijani Manat through. It will handle the hard work.
Google checkout only works with a handful of currencies, currently Yen, US$ and GBP, but will only accept payments in your native currency (so GBP for UK accounts). It will not take payments in Euros.
For SagePay, providing your bank account with the merchant facility is set up to accept payments in other currencies, then you just let them know and it will pass on the payments in the original currency.
World Pay always used to be owned by RBS, those fine upstanding titans of fiscal rectitude. They used to make you have an RBS account for payments in all currencies except Sterling, but not sure if they still do now that they are no longer owned by RBS.
Watch out for cross-border payment fees too. Even if your customer is paying in pounds sterling, some (I'm looking at YOU PayPal) also charge you for moving the money across borders. No, I don't really understand why either: it's not like there are import duties.
What other gotcha's are there? Well, you also have to watch for chargebacks. Basically, if a customer is unhappy and can't get resolution from you, they can initiate a 'chargeback', which involves telling their bank that this was a fraudulent transaction. The bank assumes the customer is correct and takes the money back. The onus is on you to prove yourself innocent of the charge. Too many chargebacks a month (more than a couple) and you could be looking at fines or suspension of your account. These sound scary, but in truth, they rarely happen if you have good customer service. Many of our customers have never had a chargeback.
Oh, and finally: one real eyebrow raiser is that refunds are counted as another transaction and therefore attract another round of commissions! That makes you cross the first time it happens, but it is survivable as most people don't have to issue many refunds.
So, hope I haven't scared you off taking money online. It really does work out well for most people - none of our customers have had real problems around this part of the process, but since the banks are involved you can expect to experience a stinging pain in the wallet. Strip aside all the comic 'chip on the shoulder' stuff about the banks and it boils down to this: you have to plan the turnaround times and transaction fees into your business model.
To find out more about how eCommerce. could help you, call Frank or Jules on 01422 847 958 or email us: make.it.work@welovetheweb.com
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