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How to accept credit card payments online
Whether you’re launching a startup or growing your business, here are the different ways you can accept credit card payments online.
With the potential for customers from all corners of the globe, the Internet opens up a whole range of opportunities for businesses of all sizes. But before you can start taking orders from customers, you’ll need to set up a payment option or options.
The convenience and security of credit cards make them the most obvious option your customers can use to pay you. This guide looks at the three types of services you can use to accept credit card or debit card payments online. It also goes through how to weigh the features and fees of these services, so you can find an online payment option that works for you and your customers. Want to accept payments in-store? Check out our guide on EFPTOS options instead.
What you'll find in this guide
Merchant account credit card payment acceptance
Merchant accounts are provided by banks and let you accept credit card payments online or in-person. Usually, merchant accounts can be tailored to suit the specific needs of your business.
You can get a merchant account with most banks in Australia, including ANZ, CommBank, NAB and Westpac. Some of these merchant accounts offer complete online payment packages, including an online payment gateway. Others may be available only after you have set up a third-party payment gateway service. This makes the latter more like regular bank accounts, where you receive the payment after an online order is processed.
Payment gateways
An online payment gateway is a secure service that lets you accept payments from your website via a dedicated payment form. In a sense, it’s the online equivalent to the card reader you might use to accept in-store payments.
Some payment gateway services offer their own accounts where you can store the money received from purchases. Others can be linked with your merchant account. Either way, once your customer clicks “buy” on your website, they’ll be taken to the payment gateway. This is where they fill out their payment details and confirm the order. The payment can then be processed into your chosen online payment account.
What are the most common payment gateway services in Australia?
There is a wide range of payment gateway options available online, each with their own benefits, features and pricing options. It’s a good idea to compare a few options based on your business goals and needs.
But if you’re just getting your head around accepting payments online, here are some examples of popular payment gateway services in Australia:
- Braintree
- Card Access Services
- Cybersource
- eWay
- Fat Zebra
- Merchant Warriors
- PayPal
- Pin Payments
- SecurePay
- Shopify
- Stripe
Just like merchant accounts offered by banks, some of these services offer complete packages and others simply offer a gateway that you can use with a merchant bank account. SecurePay, for example, offers a package that combines the payment gateway with an online merchant account as well as a simple payment gateway you can use with your existing merchant account.
Other services that let customers pay with credit cards online
While merchant accounts and payment gateways are the two key options to consider when you want to accept credit card payments through your online store, there are several other services you may want to consider based on your business structure and needs. These include the following:
- BPAY. Want to give you customers the option of using BPAY instead of a credit card? You can talk to your bank about adding this option or contact BPAY directly.
- Direct debit services. If you’re running a subscription service or charging ongoing fees, you may want to consider a payment service that gives customers the option of direct debits. Some examples include Ezidebit (which is also a regular payment gateway provider), QuickPay and NAB Direct Debit.
- Mobile payment options. While not technically a complete payment service, mobile payment platforms such as Apple Pay and Google Pay can add another layer of security for your customers. Many merchant accounts and payment gateways are compatible with these services but not all of them are. So make sure you check the options available if you want to accept Apple Pay, Google Pay or any other mobile payment service.
- Global commerce websites. If you’re planning to set up your business on a site like eBay or Etsy, these websites already have payment gateways in place. So you’ll just need to set up an account where you can receive the payments your customers make.
Guide to credit card processing for small to medium-sized businesses
What fees will apply when I accept credit card payments online?
Just as fees vary between in-store payment options, they can also be different online. But generally, you’ll have three main types of fees to pay: set-up fees, account fees and payment processing fees.
1. Set-up fees
Some online payment solutions will charge you a one-off set-up or service fee to establish the payment gateway or account. The costs usually depend on factors such as the size of your business and the type of payment solution you choose, so you may want to request a quote before signing up for a merchant account and/or payment gateway service.
2. Account fees
The account fees you’ll pay are usually monthly or yearly charges that are set at a fixed rate. These fees could vary based on a range of factors, including the size of your business, the estimated number of transactions and the features or package you choose. It’s usually relatively easy to budget for account fees because they are a fixed price and charged at regular intervals. But making sure you choose the right type of plan and fee structure for your business is essential.
3. Payment processing fees
Most online credit card payment services charge fees as a percentage of each transaction. Some also charge a fixed dollar amount. For example, PayPal charges between 1.1% and 2.6% plus a fixed-fee of $0.30 per transaction made in Australia and up to 3.6% for transactions made in a foreign currency. The fees can also vary depending on the services or package you choose.
SecurePay, for example, charges 2.4% on domestic Visa and Mastercard payments when you opt for the SecurePay Online Payments package that includes a payment gateway and online merchant account. But if you had an existing merchant account with a bank and wanted to use SecurePay as a payment gateway, you could choose between the following fee structures:
- $0.45 per transaction and $395 annual fee
- $800 for 3,000 transactions with $0 annual fee
- Custom pricing if you estimate you’ll accept over 5,000 transactions per year
Unlike set-up and account fees, payment processing fees depend on the number of purchases made. So it can be harder to budget for these costs when you’re just starting out online.
How to compare online credit card payment options
Keep these factors in mind when you’re looking at ways to accept credit card payments online, so you can find the solution that works for you.
- Fees. This is one of the most important factors to consider. Make sure you factor in all set-up, account and payment fees, along with your estimated online sales. This will help you find an option that balances your costs and profits.
- Set-up process. Most online payment solutions will give you estimates of how long it will take to set up. Generally, the complete package options that are offered by some merchant accounts and payment gateway providers will be the fastest to set up because everything is bundled together.
- Support services. If you’re new to ecommerce, make sure you weigh the support services available through your merchant account or payment gateway account, so you can find an option that will work for you.
- Payment data. To help keep your accountant or accounting team happy, make sure you check how payment data is reported and presented through the merchant account or payment gateway service.
- Website compatibility. Most major online payment platforms are compatible with website hosts and services. But compatibility also means looking at how the payment process fits with the design of your website. So when you’re considering a merchant account package or payment gateway, make sure you look at how payments are processed and the way this could impact your customer’s experience.
If you’re just starting out with your website or online store, setting up credit card payments will be one of the most important steps you take. So spending the time to compare different payment options will help you find one that is right for your business and your customers.
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Updated April 6th, 2020
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How does processing credit card payments via email work?
Hi Bill,
Thank you for reaching out to finder.
The process of CC payments online is show below:
The authorization process goes roughly like this:
1. Your customer buys an item on your site with a credit or debit card.
2. That information goes through the payment gateway, which encrypts the data to keep it private, and sends it to the payment processor.
3. The payment processor sends a request to the customer’s issuing bank to check to see that they have enough credit to pay for your stuff.
4. The issuer responds with a yes (an approval) or a no (a denial).
5. The payment processor sends the answer back to you that the sale was approved and also tells your merchant bank to credit your account.
The second piece of the process is the settlement:
1. The card issuer sends the funds to your merchant bank, which deposits the money into your account.
2. The funds are available.
The email you are pertaining to is normally the email invoice that the merchant sends to the buyer, on the email is a link of where the buyer could pay the transaction. Hope this helps!
Cheers,
Reggie
When taking a credit card payment over the phone, what is the legal position when other party gives credit card with name not theirs.
Hi Julie. You should be aware of the merchant’s responsibilities under the terms and conditions of the merchant agreement. It is the merchant’s responsibility, at all times, to ensure that the purchaser of the goods and services is the genuine cardholder. According to the NAB Card Protection Fraud Booklet, ‘Your merchant agreement specifies that you are responsible for preventing fraud occurring via your merchant services, ensuring the physical security of your merchant equipment and the protection of cardholder information.’ The booklet goes on to say, ‘At no times should a merchant process transactions on behalf of a third party. Not only will you pay the merchant service fee but you will also be liable for any charge backs that arise from these transactions. Processing transactions on behalf of a third part without prior authority from NAB, is a breach of your merchant agreement and may result in the termination of your merchant services.’
The same document from Westpac builds on this by saying, ‘At all times, the onus is on you (the merchant) to verify the purchaser is the genuine cardholder. This applies to all merchants irrespective of the method by which credit card payments are accepted. It’s particularly important for Internet and MOTO (Mail Order & Telephone Orders) to identify the purchaser,’ it continues. ‘If you sell goods to a purchaser who is not the genuine cardholder, you (the merchant) may be liable for the charge-back.’
To conclude, ‘It is emphasised that authorisation does NOT constitute verification of the purchaser – the transaction can be fraudulent even though authorisation is obtained.’
Julie – that’s how the banks view this type of transaction.
Jacob.
So let’s say the merchant was to create a “credit card authorisation form” for customers to sign and send it back (with perhaps copies of ID & credit cards).
Would the card holder still be able to make a dispute?
What happens if the card holder makes a dispute saying that the form was never signed by him/her (and also copies of ID & cards were not sent)?
Hi Chris,
Thank you for your inquiry.
If the cardholder can prove that they have not signed the authorization and if they were not properly verified by the merchant, then the cardholder can file a dispute and the merchant may have to give a refund.
So it’s important on the merchant’s part to verify the genuine cardholder and keep a photocopy of the cardholder’s ID’s (with signature) and credit card as your proofs in case of customer disputes/complaints.
Cheers,
May