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For most online retailers, the first basic requirement of any online shop is to be able to accept credit/debit card payments.

Internet Merchant Accounts

Except in the simplest of circumstances, you will need to have an Internet Merchant Account (IMA) with one of the main acquiring banks (such as Barclaycard Merchant Services, Bank of Scotland, HSBC, Streamline) in order to receive payments into your bank. Internet Merchant Accounts from the main banks are not always easy to come by – they may want evidence of your trading history, for example, making it difficult for new businesses to get started in e-commerce. Fortunately there are other options which make it relatively easy to get started (see PSPs below).

By the way, even if you already have a Merchant Account for either telephone/mail order Card not Present transactions, or have an instore payment terminal, you will still need a separate IMA.  A few years ago, people could, and did, get away with downloading customers credit card information onto their PC and processing it through their CNP account. You can’t get away with that now. It could lead to fines from your Bank and/or having your credit card processing facility removed. Do Not Do It.

Payment Service Providers

In addition to an IMA, you will need a Payment Service Provider (PSP) to process payments for you. While it is still technically possible to process the payments yourself through your IMA, it is no longer wise to do so. For most small businesses, the requirement  to comply with the Payment Card Industry Data Security Standard (PCI-DSS) guidelines makes it not worthwhile. Instead it is better to hand the actual processing of card payments over to a Payment Service Provider.

PSPs,  also called payment gateways, offer various packages and rates to suit different merchants. Some are more appropriate to merchants processing a high number of transactions, some are better for start up businesses who will initially have a low number of transactions.

When Using a PSP, the customer is transferred automatically to the PSPs secure payment area before entering  any credit card details. They handle the approval process, and pass on the payment and order details back to you. This way, you never see any credit card details, so you don’t have any security problems to think about.

You should also be aware that some PSPs also provide IMAs, and some acquiring banks provide PSP services – so it’s worth checking what services you bank provides.

Payment Processing Companies

An easier and quicker alternative to the above approaches is to use a payment processing company.  This option removes the need for a separate IMA and PSP, and the application process is usually quicker and easier which is particularly helpful if you have little or no trading history.

Two of the most popular are PayPal and Google Checkout and using either of these can be especially helpful to new or small companies, as they  remit payment to you immediately in most cases –  as soon as the payment is made by your customer, the money is deposited into your merchant account.

Of course, these are by no means the only two, and it is worth checking the rates of several options – some may be better for small numbers of large value transactions, some better for a large number of small transactions.

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