The following tips and guidelines will assist you with knowing how to accept payments on your online store.
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Now that you have decided on your domain name and you have also decided how you are going to build your website, providing you are an eCommerce platform, it’s time to talk about what method of payments you want to accept and how you will receive them!
There are so many out there, let’s look at some of these below:
In general terms, the more you offer, the better chance you will convert a sale. You are looking to provide the customer with a seamless transaction. Simple, easy and done with a click of a button.
The more time they have to think and the more buttons they have to click, the less likely the sale will go through. It’s essential, however, to maintain the practice of “never putting all your eggs in one basket”. Imagine you only offer one payment method, and it has downtime during your peak?
It’s also important to weigh up the fees and any available seller protection. Moreover, it is critically important for you as the seller to be able to contact the financial institution that provides you with their services at any given time. Whilst it’s excellent, for example, to be able to offer the ease of PayPal as a method of payment, if something goes wrong, they have been known to limit or suspend people’s accounts whilst holding onto their funds and trying to seek resolution can be a frustrating and a lengthy process. Cases can often end up at the financial ombudsman due to a lack of communication. On the flipside, PayPal, in my experience, has been a service that has rarely had any issue of fraud occurring. Fraud occurs when someone has transacted on your website, but the credit card or payment account owner has not authorised it. This is more frequent when dealing with credit cards. I speak in detail about disputes and chargebacks related to online fraud.
Merchant Facility from your bank + a third-party gateway that will accept and disburse payments to your bank:
It’s worthwhile shopping around for a bank that will provide you with a merchant facility. Negotiate rates & fees with them and try and get the best deal possible. Look out for things like cut off times and daily settlement of your money, even on weekends and public holidays. This is crucial to your cash flow.
Settlement and cut off times just mean that there is a pre-assigned time that they will settle your funds for that day. So let’s say, for example, it is 4:00 PM; you would expect to see your total sales in your bank the next day up to 4:00 PM. Anything after that will settle the following day, and funds will appear the day after. This could be especially important if you deal with international sales, where your website’s sales start coming in after 6:00 PM. You would not see this money come through until the next settlement day.
Some banks may not settle on weekends and public holidays. This would mean that what you sell from 5:00 PM onwards on a Friday afternoon right through to Monday 5:00 PM may not be transferred to your bank until Tuesday. If you sell $20,000 of merchandise a day, this could be a whopping $60,000 just sitting somewhere in space waiting to land.
Yep, Houston, we have a problem!
My merchant facility was with the same bank with which I had our business accounts. This generally gave us a greater negotiating power, and it just made sense that the whole package ran as smoothly as possible. They also offered a same-day settlement, even on weekends.
A massive downside to merchant facilities is the fraudulent transactions on your website, for which you are entirely responsible, and the bank wipes its hands completely clean. They will refer you to your merchant facility agreement in the form of a standard template letter, and they will also charge you a chargeback fee of around $25 for the privilege!
Third-Party Payment Gateways
A third party payment gateway is just an entity that securely accepts the payment from your customers on your website and sends it off to your bank. To do this, it connects to your online store and your merchant facility.
I have used a couple of third-party gateways, but I recommend Secure pay. Their interface is simple to use, they have some great features such as fraud protection, recurring subscriptions and billing, detailed reports, and custom made reports, and their customer service is of a high standard. When tackling fraud on our website, they worked with us effortlessly and created a custom report emailed to us with specific information, which we requested daily. This enabled us to verify and detect suspected fraud on our site. Their security and compliance are top-notch, and they offer a simple setup and integration with any website.
PayPal:
There are significant advantages of offering PayPal as a payment method on your website. It is easy for the customer to hit pay and automatically does everything it needs to. The money lands in your PayPal account, fees are taken out immediately, and it’s generally a seamless experience. Prices can be high, but they can be negotiated. In my 17 years of using PayPal, I cannot remember a fraudulent transaction occurring once. A massive bonus to this platform.
On the flip side, though, they are challenging to communicate with, and it is tough to fix things when they go wrong. More than likely, you will need the financial ombudsman to intervene and get your account up and running again together with the funds that they have frozen.
Cranky Boss much? Like, seriously – how can I not be?
Settlement or transferring funds to your bank account is stated up to a few business days, but I always get my funds the following day. If I transferred at 6:30 am, I would often see the funds show up by lunchtime. Transfers also occurred on weekends.
Buy It Now Pay Later Services:
AfterPay | ZipPay |Klarna
It’s great to have these options at your checkout as it allows the customer to pay with their preferred buy it now pay later scheme. I opted for ZipPay / ZipMoney partly because their fees were a fraction of the price of afterpay and because after pay was only available to specific platforms when they emerged.
ZipPay is a seamless buy now pay later service. It has very competitive rates, an excellent interface and exceptional customer service—no known problems working with this company. Similar to PayPal, there was no fraudulent activity through their platform, and settlement was prompt.
Eftpos Terminals
You will generally need a terminal if you are operating bricks and mortar store or if you have a physical location. We commonly used ours when taking phone orders as well. The best practice is to have a couple with different providers. Some outages can occur, and you don’t want to be left without a payment alternative. The other reason is quite simply because of a facility known as Live Eftpos. In a nutshell, Live Eftpos Black, whilst it may have a higher percentage per transaction, gives you the privilege of earning 1 Qantas point per $dollar spent by the customer. So let’s say Jane comes in and buys $300 worth of product and pays by credit card; by swiping Janes card on your Live EFTPOS Black terminal, you have accumulated 300 Qantas points. It’s a great way to earn frequent flyer points with Qantas and grab that free ticket at the end of the year.
Other: Don’t overlook digital payment methods such as apple pay, square, and stripe, which have all entered the market and have their advantages. However, I would recommend these be in addition to the ones mentioned above.
Cultural: If you have a large customer base based in China, for example, you will want to look at what payment methods are familiar to them. Platforms such as Alipay, WeChat Pay & China Union Pay are common.
Payment Surcharges
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As a business, when you process certain types of payments, you will almost always incur a fee for processing that payment. This may come in a percentage or a flat rate, or both. Some businesses choose to absorb that fee, while others pass it on to the customer.
There is a ban against excessive surcharges. For instance, if your financial provider charges you 1% for a credit card payment that you process, you are not required to impose a fee on your customer. If you decide that you would like to, you cannot charge anything above what the bank has charged you.
These rules apply to the following payment types:
- Eftpos (Prepaid and Debit)
- MasterCard (Prepaid, Debit & Credit)
- VISA (Prepaid, Debit & Credit)
- American Express cards that are issued through an Australian Financial Service Provider and not directly through American Express.
These rules do not apply to the following payment types, but you should check with these payment systems as they may have their own rules and limits to surcharges you can impose:
- Paypal
- Diners Club
- BPAY
- American Express cards issued directly by American Express
- Cash & Cheques
The ACCC sets out clear rules and guidelines regarding excessive surcharges.
I have never charged a customer a payment surcharge on using a credit card. I have always absorbed this cost or included it in my fixed total price. This is good business practice and essential to customer trust and loyalty.
Getting product pricing is critical because anything you add to the price that the customer has already assumed they are paying could negatively impact your sales and your business reputation. An all-inclusive price generally works well and generates trust. Those random add-ons can create a lot of frustration for customers who can, in turn, abandon purchases. Imagine acquiring a customer at a rate of $30 to get them in your doors and then losing them for a few extra cents.
Currencies
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If you are selling to an international market, it is beneficial to provide them with a live currency converter in the form of a plugin or gadget. This will give them the ease of understanding what they will be paying in their currency.
However, you should include disclaimers to ensure they understand that payment defaults to your local currency and the conversions are approximate only. They may incur additional charges when their bank converts to their local currency.
Alternatively, you could also look at accepting major currencies such as the US Dollar or Euro. You can negotiate this with your financial institution or merchant facility and payment gateway.
I spoke about fraudulent transactions earlier on and I provide some information and tips on how to spot these. I also mention the types of fraud that occur and how to identify them. It’s important to familiarise yourself with these as they can quickly end up in disputes and chargebacks.
You can click here if you would like more information on fraudulent transactions and the types of fraud that can occur on your online store.
Online fraud forms part of your risk management which is an important part of your strategic management. Strategic management is one of the most critical elements in business. In fact, if you follow my 5 step guide to running a successful business you will come to understand just how important it is to have strategies in place. Not having strategic management is the number 2 out of 4 reasons why businesses fail.
