5 must-know facts about online payments

For small or fledgeling businesses, it’s not uncommon to start off accepting in-store, face-to-face payments only. But, to widen your audience, maximise your profits and reach your potential you’ll probably want to expand your offering into the online arena at some point too.

It might seem like a complex thing to wrap your head around,  maybe you wouldn’t consider yourself a tech boffin, or perhaps you even feel out of your depth, but don’t worry, we’ll hold your hand through the process. 

Whether you’re an online business start-up or a brick and mortar store looking to jump online, check out our five must-know facts about online payments to get on the right track. 

1. How they work

Let’s start with the basics of how online payments work. In order to accept card payments online (in-person or over the phone), you’ll need a merchant account. Some of you might already have one, but for beginners here’s the low down. 

At its core, a merchant account is one that allows businesses to accept payment via credit card, debit card, or e-wallet. Payments made in this way are deposited into your merchant account before being transferred to you. Essentially, a merchant account is a holding pen for your online transactions while checks are made to ensure the payment is legitimate. 

So, what does an online payment look like in action? 

1. The consumer either enters their card details, gives them to you over the phone, or uses their e-wallet.
2. The card and transaction details are sent to your merchant account.
3. The merchant bank pings the info over to the relevant card issuer (Visa, Maestro, etc.).
4. The issuer forwards this information to the customer’s bank to check the funds are in place.
5. If the money’s available, the bank pops a response back, via the issuer, approving the transaction.
6. The customer gets a ‘transaction complete’ message. 
7. You get paid (yay!).

Simple, right? But seriously, as complicated as it might sound, most of these steps will take place behind the scenes and all you’ll need to do is set yourself up with a merchant account and online payments system - leave the rest to the experts. 

If a transaction is successful, the money will be in your business account within a few days. If it’s declined, you’ll be informed but there’s nothing you need to do. 

Top tip: For a more in-depth look at merchant accounts head to our handy guide. 

2. Consumers want them

As recently as 10 years ago, people were still pretty hesitant to hand their card details over online, but not anymore. Online payments, like a lot of new technologies, have been rapidly adopted by joe public, meaning they’re now in high demand.

Yep, consumers have done a full 180 and now expect an online option and view businesses who don’t offer them as being out of touch. Why are they so popular? Here are just a handful of reasons:

1. They save time - Not only are the transactions themselves super speedy, but they eliminate the need for shoppers to head out and travel to a store, engage in the hustle and bustle, and wait in a queue. 
2. They break boundaries - Historically, a consumer from Edinburgh would have struggled to get their hands on goodies from a London-based store. Thanks to online shops and payments, those geographical barriers are gone. 
3. They’re super convenient - Consumers don’t even need to have their card details to hand to complete a transaction anymore. Thanks to mobile and e-wallets, a purchase can be completed in just a few clicks. Even if card details are entered, the process is rapid, simple, and can be done from anywhere.
4. They’re free - As well as being quick, simple, and handy, they also cost consumers nothing, making them a value-added convenience.

3. They’re not one size fits all 

We’ll forgive you for thinking you need a dedicated system on your website in order to accept payments online, granted that’s one way to do it, but we’re happy to tell you you’re wrong. There are three ways you can offer online payments, so let’s have a quick look at each. 

Payment gateway

The most well-known way to accept online payments is through your website using a payment gateway. Your customers fill their online shopping baskets, head to the checkout page which is hosted by your payments provider, and enter their details. It really is as simple as that. 

Choose the right payments provider and they’ll help you or your website developer at every step of the way, so there’s no need to worry if technology isn’t your cup of tea, you can just sit back and watch the payments roll in. 

Pay by link

Not all businesses need their own online shop but might want to add online payments to their toolkit. For example, a venue who takes bookings might meet their customers to discuss requirements and then send an invoice at a later date, and that’s where pay by link comes in. 

It involves creating an invoice and emailing it to your customer with a link through which they can pay online. Any decent pay by link provider (spoiler, us) will still accept all major card issuers, so you can offer an online payments option that’s a perfect fit for your business while keeping your customers happy. 

Virtual terminal

This one flips online payments on their heads because it’s you who enters the customer’s card details online. With a virtual terminal, all you need to do is log in to a secure page, aka the virtual terminal, while you’ve got your customer on the line and pop in the details they provide. 

Maybe you’re a plumber and your customer wants to pay an invoice - say goodbye to the painstaking wait to receive your cash, the customer can simply give you a ring with their details and bob’s your uncle, you’ll get paid.

4. They’re super safe

For you and your customers, online payments are very secure and protect both your and their details when buying things online. The security systems used will vary between methods and providers, but to give you an idea here’s an overview of our measures:

• We use 3D secure technology whereby the customer is asked for their security password before a payment can be authorised with our pay by link and payment gateway solutions.
• Our virtual terminals are equipped with up-to-date security and offer checks including Address Verification System (AVS) and Card Verification Value (CV2 or CVV).
• Our payment gateway is SSL certified, protecting both party’s details during a transaction.

5. They won't cost you the earth

Let’s start by saying that accepting payments online isn’t free (what is these days?), but, it’s a super cost-effective method because the additional income it inevitably brings outweighs the small associated outlay. 

We’re sure you’re already aware of the fees charged (including chargeback and interchange fees) when accepting payment by card, and the same applies for online card payments. It’s also important to remember you’ll be required to be PCI compliant if you want to accept card payments from any source. 

However, set up your online payments with a provider who doesn’t tie you down to a lengthy contract, won’t charge you sign-up or exit fees and offers personalised pricing and packages, and you’ll squeeze every last bit of profit out of your online sales. 

Now, we don’t want to toot our own horn, but here at takepayments we offer all of the above with a cherry on top, and our online payment systems - including virtual terminals, payment gateways and pay by link - are some of the finest on the market.

What’s more, if you need help setting up your merchant account or some top-class developer support, we’ve got you covered for that too. Get in touch with our team of friendly experts on 08082 393254 to see what we can do for you. 

Bryony Pearce

Copywriter