Web Online Payments

How do online payments work?

Online payments are typically performed using a system that collects and verifies credit card details automatically, before performing a credit card purchase that is credited to your merchant account. However, there are other ways of collecting payments.

• When a user goes to the checkout, this is one way for them to pay.
• They could pay with a credit / debit card, or with some kind of online voucher or currency.
• Another alternative is that the user doesn't pay online at all.
• A user could phone up to give credit card details (some users perfer this) or send in a cheque or money order. If you are really worried about fraud you might require the latter.
• If the customer doesn't pay online the order can still be sent to a person for processing - they can hold it until payment is made.
• The vendor, not the card issuer, is liable for refunding fraudulent card holder not present (CNP) transactions - whether made online or over the phone.

What do you need to start accepting online payments directly?

• To accept credit card payments you need a merchant account. Most banks can provide these, but they vary in the terms they offer. There is usually a percentage levy on transactions, a monthly fee, and a minimum transaction limit (you pay the extra if your monthly transactions fall below that limit).
• To verify credit card payments, you need a card verification provider. This could be the same bank that provided your merchant account, or it could be a specialised card verification company like Protx or eWay. The specialised companies may offer a cheaper service, though this may vary greatly depending on how much your bank values your business.

Online payments without a merchant account

If you don't already have a merchant account, then one way to accept online payments is through a system like 2CO. The vendor site securely transfers the list of products that your user has in their shopping cart to 2CO's secure site and allow the user to authorize payment. Technically, 2CO act as a reseller of your goods, which has some ramifications regarding how they pay the money to you, though this is unlikely to be an issue for most vendors.

The 2CO card verification system is excellent, and copes better with unusual and foreign cards than manu other systems. If you shop online you've probably shopped successfully through 2CO already. All sensitive customer data is collected on 2CO's secure site, and not on your site, so you don't require HTTPS or an SSL certificate. (Read more about HTTPS and SSL).

Using the 2CO system you can avoid the expense of your own merchant account, card verification service, SSL certificates, SSL fraud warranties and SSL logo verification programs. You can also choose the currency it works in (for example it can work directly in Australian dollars). It's one of the safest services around because 2CO see so much online payment traffic that they are experienced at dealing with international card fraud.

PayPal also provide a means for you to accept online payments without a merchant account. All the benefits of 2CO also apply to PayPal, though the systems are somewhat different to use. You should look at the sites of both companies before deciding if either of them is right for you.

Online Payment Choices

You can see from the wide range of payment systems and options out there that the internet is the place that business is moving to. Online sales are up year on year while the high-street goes down. It's likely that the payment systems available for online purchases will continue to improve and proliferate at a considerable rate.

• Different finance companies provide support for credit card verification, and they have different ways of billing. We suggest eWay and Protx (see above) as cost effective solutions if you have a merchant account. Banks, such as ANZ also offer their own solutions, which are of good quality, but they may not be the cheapest.
• Many verification services, like Protx provide a payment gateway, where the payment transaction is handled on another site. If you want to avoid any 'domain transfers' and keep the user on your site for the whole transaction process, then you need a pure verification service, such as the XML Payments system from eWay and a secure site.
• Your merchant account will determine the currency that you accept payment in. Most Australian companies prefer to charge in AUD, and so an Australian merchant account is ideal. However, if you want to accept payment directly in US dollars, then you need a USD merchant account. Your bank may be able to assist with a special 'currency account' if you want to accept transactions in a foreign currency.
• For some types of business, PayPal is more appropriate. Not everyone has PayPal, but there are types of transaction where PayPal has become the default currency (eBay) and PayPal can perform card verification for people without accounts if need be.
• The fees to transact through 2CO, PayPal may, or may not be cheaper for you - it depends on the size and number of your transactions. You need to think carefully about the sort of transactions (value and number of them) that you are going to make when choosing a verification provider or payment system.
• Make sure you study the transaction and monthly fees carefully.
• We charge the same to implement 2CO or PayPal payments as for credit card verification through a remote secure payment gateway like Protx or the ANZ system. However, if you choose to perform true on-site verification using a service like eWay XML Payments, you will need a secure site, and some extra work, so it will be slightly more expensive than the above options.