As your business builds its online presence, you might consider expanding your customer payment options. If you give consumers as many payment options as you can, you open up more opportunities for customers to pay in the manner that they are comfortable with—giving them more incentive to become (or continue as) part of your loyal customer base.
While popular methods are good, many others use the same technology, making them worth investigating as well. However, it is important to first understand some terms, and understand how these payment methods are provided, processed, and accessed when you are deciding on which options to provide—so that you can make more informed decisions.
Virtualization (the movement of physical devices onto cloud-based platforms), has led to an even greater number of online payment options. Virtual terminals and payment gateways are newer technologies in the payment process, allowing for multiple methods and devices to be used for purchasing.
Most card processing providers have implemented virtual terminal technology into their service offerings. A virtual terminal is a method of accepting payment from credit and debit cards without the card being present.
Virtual terminals are usually a web-based software program linked to your accounts, that allow transactions between you and your customers. You enter your customer's billing information, card number, expiration date and security code, and the transaction should securely take place.
A payment gateway is generally linked to customer-facing transactions, through a web-based shopping cart on your website. When a customer finalizes a transaction, the information is encrypted and sent to the gateway, which forwards it to your card processor, which then sends it to the customer's card provider to credit or debit their account.
Credit Card Processing
Credit cards are still the most popular way to pay for goods and services online.
To set up credit card processing on your website, (MasterCard, Visa, American Express, Discover), you need to have an internet merchant account (an exception to this is Paypal, which offers payment solutions which do not require a merchant account).
You can usually get an internet merchant account through the bank your credit cards are through. For credit card processing of all the major credit cards on your website, you may need to get internet merchant accounts with separate banks as many banks only deal with some of the credit cards involved.
You can also get an internet merchant account through a third-party merchant account provider, such as Merchant Accounts, Beanstream, Moneris, PSiGate or InternetSecure.
Merchant Account Advantages
The advantages of getting an internet merchant account through a third-party merchant account provider are that most don't require any security deposits, are quickly set up, and often can be bundled with e-commerce service packages that include the internet gateway you need for online credit card processing (web point-of-sale) and a shopping cart.
Third-party merchant accounts may have higher fees. Discount fees, in particular, tend to be higher than if you had set up your internet merchant accounts through the banks.
Some of the fees you may encounter are:
- application fees
- setup fees
- monthly fees
- per-transaction fees
- monthly minimums
- non-qualified fees
- cross-border fees
- gateway fees
- terminal fees
Make sure you get a complete written listing of all fees before you sign on with a merchant account provider.
Wherever you get your internet merchant account, you will have to also purchase the internet gateway service. The gateway verifies information, transfers requests and authorizes credit cards in real-time.
The debit card is the preferred method of payment for 33% of Canadians. There are more than 35 million debit cards in circulation in Canada, according to the Interac Association. Every year, Canadians make more than three billion Interac Direct Payment transactions worth hundreds of billions, and the number of debit card payments grows about 5% every year in Canada.
Interac Online is one option that allows your customers to pay for goods and services online directly from their bank accounts. It's convenient and secure for customers because they don't have to share any of their card numbers or financial details when making a purchase; payment is completed through their own financial institutions.
To start offering Interac on your website, you have to go through one of their certified acquirers or online payment service providers, such as Beanstream, Moneris, Internet Secure or PsiGate.
Apple, Google, and Samsung Pay
Apple, Google, Samsung all offer payment options through devices that have their operating systems on them. iPhones and Android phones have the ability to link payment methods to most credit and debit card providers.
A device called a contactless payment reader readers accepts connections from your customer's devices and initiates the transaction.
PayPal provides an all-in-one online payment solution that does not require a merchant account. The Website Payments Standard program lets you accept Visa, MasterCard, Discover, and American Express credit card payments as well as bank transfers and offer PayPal as well—with no monthly fees, setup or cancellation fees.
Other payment providers are popping up all the time, offering services similar to PayPal. Due, Dwolla, and WePay are among the list of numerous digital transaction providers. You'll have to keep abreast of your customer base to be sure you accept the methods they want to use.
Offline Payment Options
Some of your potential customers are people who aren't comfortable with online options, or they are people who want to talk to a live person. If you want to fully monetize your website and make all the sales that you can, it's important that you give these people ways to pay as well. Include a toll-free number or an order form that customers can fill out and email or send through regular mail if they prefer.
The More Payment Options, the Better
The success of your online business depends on sales. With the possibility of one customer paying with a watch, the next with a card, and a third with a check, you should offer as many payment options as you can.
A mix of all the options available will help you keep customers on your e-commerce site, or in your store because they can pay the way they want to. If you don't offer a service for someone to pay their way, the possibility of losing that customer is high.