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Manual Funds Transfer

Although it doesn't begin to realise the promise of eCommerce, you can accept mailed cheques or money orders, direct bank transfers, or even have an option to pay for an order when it is available for collection from your premises.

Your manual payment method(s) will need an optional set of instructions for your customers, so they can select it like any other payment option.

Merchant Accounts

An Internet Merchant Facility (IMF) or merchant account is a specialised bank account designed to receive the proceeds of online transactions and transfer them to your settlement account, which is usually your regular business bank account. These transactions are typically settled at the end of each business day.

Every payment made electronically involves the transfer of funds to your 'merchant account', which you hold directly with your chosen bank or other financial institution. The merchant has full responsibility for the transactions that occur with this account, and each bank has its own terms of service that you must comply with.

If you want to accept credit card payments etc, you will need either the services of a third‐party payment processor (Option A) or an integrated merchant account of your own (Option B), as shown in Figure 6.

Figure 6 – Key Steps in the Payment Chain

This Figure illustrates the five key sets of steps in the online payment chain. Step 1. Shopping Cart (Collect customer order) Step 2. Payment Gateway (Collect customer details) Step 3. Payment Switch (Transfer payment data to cardholder bank) Step 4. Cardholder Bank (Debit customer account) Step 5. Settlement (Funds transferred to your account)Option A shows Steps 1 and 2 grouped as "Third-party services (Chosen by you)"; Steps 3 and 4 grouped as "Internet Merchant Account"; and Step 5 identified as "Your Transaction Account"  Option B shows Step 1 identified as "Third-party service (Chosen by you)"; Steps 2, 3 and 4 grouped as "Integrated Gateway and Merchant Account"; and Step 5 identified as "Your Transaction Account"

(adapted from CBA Merchant Services)

Payment Gateway

If you want to accept credit cards online ACCAN recommends that you use a payment service provider and process the credit cards via a 'payment gateway'.

An eCommerce payment gateway is a service that authorises credit card payments and processes them securely with a user's merchant account. Often, a merchant account and payment gateway are set up in one process through the same company.

There are strict regulations around the use and storage of credit card information which are regulated by the Payment Card Industry via their Data Security Standards. You can find more information at their website, or through your bank.

When you are selecting a payment gateway service provider, research providers on-line, taking into account their reputation, and then decide based on factors such as:

  • the ease of integrating it with your site, including whether the provider supports the bank that holds your merchant account;
  • the functionality of the provider's online service portal, which allows you to log in and review or reverse transactions;
  • the costs, including set up fees and combination of periodic and transaction fees; and
  • the level of security and privacy offered

This illustration shows a credit card held in the left hand while the right hand enters details from it using a laptop PC keyboard.

If you can estimate the number of transactions you expect in a given period you can calculate the likely total cost and thus compare providers better. Payment Gateways Australia offers advice and pricing comparison tools.

You may find that your existing financial institution can provide all of these services as part of an eCommerce package (e.g. ANZ's eGate, CBA's CommWeb, NAB's Transact or Westpac's Payway). Australia Post offers a similar facility, with the added benefit of a 'fulfilment' (integrated delivery) service.

At the time of publication, non-bank financial institutions (i.e. credit unions and building societies) in Australia appear not to offer eCommerce packages, although their transaction accounts can be integrated with your merchant gateway.

Third-party Payment Processors

A third-party processor such as PayPal, Paymate or eWAY let you accept online payments without a merchant account of your own. Instead, they let you use their merchant account under their own terms of service (which will involve a fee to be paid by you), usually with very little setup required.

Regardless of the payment method you are using, do not deliver goods or services until you have confirmation that you have received valid payment.

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