Electronic payment refers to the mechanism of paying for a product online via a debit\/credit card or another electronic payment service. Amazingly, some companies still do not accept payment online, preferring phone or other payment methods. Taking online payment has the following advantages:<\/p>
Customers expect the convenience and immediate satisfaction which online payment provides. A company that is not offing its customers the opportunity to pay for products or services online is certainly losing sales to competitors which offer a quick and easy online purchasing process.<\/p>
There are three main ways of accepting payment for online retailers:<\/p>
One way or another, these are usually funded by credit\/debit cards, though a bank account can finance third-party payment solutions such as PayPal.<\/p>
Before payments went online, offline businesses accepting credit cards required a merchant account with a high street bank to settle transactions and a handheld card machine known as a PDQ to process the payments in-store.<\/p>
When collecting payments online, a merchant can use a payment gateway (a virtual PDQ) to process payment onsite. They will also need an online merchant account to settle the transactions.<\/p>
Payment gateways are available from high street banks or separately from third parties. There is a fee payable to the payment gateway and the acquiring bank when accepting payments online. This fee will depend on the volume of transactions and the risk associated with the business.<\/p>
All-in-one solutions such as Stripe<\/a> offer a complete solution for collecting and processing the card details on behalf of the business without requiring an online merchant <\/a>account or a separate payment gateway to be set up. They can be more user-friendly and fees more transparent as all the processing happens under one roof.<\/p> Worries about online payment security in the early days of the Internet led to the launch of alternative checkout solutions such as PayPal, which enabled customers to pay online without entering their card details. When paying using an alternative checkout, the customer is directed to the checkout provider to complete the payment. Popular solutions include:<\/p> These solutions have an easy sign-up process and offer competitive commission rates. As well as supplying an excellent service to retailers, these payment solutions also improve the user experience of making payments online. With more sales happening online, the alternative checkout experience has some advantages for users:<\/p> The familiarity of alternative checkout such as PayPal reassures the customer that their money is safe and can reduce abandonment. This is a big problem with up to 80% of customers going through part of the checkout process without completing the transaction (source: Bolt<\/a>).<\/p> Whilst online security has improved, fraud is still very much a worry, especially as fraudsters are moving online with the shift from offline to online commerce. It pays to understand:<\/p> Below is some general advice for avoiding fraud online:<\/p> Due to privacy restrictions, merchants know surprisingly little about the card transactions they are accepting. When a card transaction is successful, they will have access to the following information:<\/p> When setting up their payment system, merchants will need to decide the level of risk they are willing to accept when taking payments. For example, it is standard to accept card payment only where the CV2 code was correctly entered. This, however, is not obligatory. The stricter the test, the more transactions will be rejected. There will inevitably be some false positives, so exercise common sense.<\/p> When selecting a payment processing system, ensure that they provide a fraud alert system that will help your business find orders that need to be rejected or reviewed. Stripe, for example, provides merchants with a fraud score for each order based on its subjective assessment of the risk. The merchant can create rules around this score, e.g., < 50 always accept, 5-100 review, over 100 reject.<\/p> One of the benefits of alternative checkout solutions such as PayPal is that their scale enables them to have sophisticated fraud detection systems. Typically, both the merchant and the customer will have a level of protection against fraud and a dispute process for when things go awry. However, it pays to understand the conditions of seller protection. For example, The PayPal Seller Protection Policy<\/a> requires:<\/p> Making products available to international buyers is a fantastic way to increase sales, and accepting local currencies increases the conversion rate. Payment service providers differ in how well they support multi-currency transactions and the fees they charge. Check:<\/p> PayPal, for example, will only allow funds to withdrawals in the default currency of the account and at a generous spread above the spot rate. It also charges a cross border fee on top of its usual fees.<\/p>Alternative Checkouts<\/a><\/h3>
Fraud<\/a><\/h2>
Credit\/Debit Cards Risks<\/a><\/h3>
Seller Protection on Alternative Checkouts<\/a><\/h3>
International Transactions<\/a><\/h2>
Choosing the Right Payment Option?<\/a><\/h2>