Accepting credit cards

Advice on how to process card payments on your e-commerce website

When setting up an e-commerce website you need to decide how you are going to accept payment over the internet. By far the most common way is through credit or debit card and, as a small businesses, you can either process these payments yourself or get an online payment company to do it for you. You choice will depend on how much website trade you expect to get.

Doing it yourself

Any business that wants to process credit card payments needs to have an account with the merchant services department of a bank, also called the card acquirer. The application process for a merchant account is quite strict – you often need to provide two years audited accounts – and not every business is accepted. Only once you are successful can your business can start accepting credit cards.

When you are set up with a merchant account, you will receive a terminal into which you enter a card’s details. This sends details of each credit card transaction to the card acquirer, which will settle with the customer’s card issuer. Within three to four days it will credit your business with the amount minus its fee, which would have been set during the application process.

“The merchant service charge is determined by the amount of turnover of the business and the average transaction value. As a rule of thumb, the higher the transaction value the lower the merchant service will be. The rate will typically be between 2%-5% for small businesses,” explains Steve Almond, head of commercial development at Barclaycard merchant services e-commerce.

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Internet ID number

However, if you’re trading on the web, having a ‘bricks and mortar’ merchant bank account may not be enough. “You need a different merchant account if you’re trading on the internet because there are different rules to doing business online. When people pay by credit card online, you can’t see them and you can’t get proof of signature. On the high street it is less likely to be fraudulent,” explains Almond, adding that as well as the usual financial checks, banks will also require online security measures. This might include such as encryption of credit card information to be in place before an internet trading ID is issued.

When you have an internet trading ID and online payment point, you will be able to receive and process customer orders and cards details. At the start you will probably forward the card details onto your card acquirer manually but if you find that you are flooded with orders, this may start to become very time consuming.

Therefore some card acquirer’s have developed a service in which the transaction can be completed automatically in a matter of seconds using special software. You would pay for this service through a percentage fee of each transaction (around 2%) plus a monthly fee.


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