As a business owner, you know the importance of getting paid quickly and with minimal fuss. Some businesses only operate online, so for them a secure, easy payment system is critical. For other businesses, accepting online payments has benefits both for the business and for the customers. Some of these include:

Chasing up outstanding invoices is time consuming. Giving customers the option to pay online may result in them paying promptly.
Improved cash flow as the payment cycle is completed faster.
Online payments can open up a whole new market of customers. If you sell physical goods, you can sell beyond your local area.

However, there are also costs and risks associated with accepting online payments, so it is important to investigate whether your likely level of online transactions will justify the initial and ongoing expenses.

Choosing the best online payment options for you

When reviewing which option is best suited to your business you will need to consider:

fees and service charges for both you and your customers
ease of use for the customer
security and protection for the customer
security and protection for your business
the time it will take to set up
how long it will take for the funds to reach your account
how easy it is to incorporate the system into your website and what support will be provided to you
whether the new payment process will lead to changes in your business systems or procedures and how you will manage this change
the fit with your customer base and how readily they will adjust to your new payment option

Website payment options

In Australia there are two main options to accept your customer’s credit card payments:

Set up a payment gateway and a merchant bank account; or
Use a third party payment processor.

This article will help explain the differences, as well as the pros and cons of these options. You may also need to comply with Payment Card Industry (PCI) and Data Security Standards (DSS), the provider’s terms of service and Australian privacy laws.

Payment Gateway plus a Merchant Bank Account

A simple way of understanding what a Payment Gateway does is to imagine paying for groceries at a store with your credit card. You swipe your credit card into a physical terminal, the software on the terminal then processes the transaction on behalf of the store and notifies the sales assistant whether the transaction was successful or not. In an online payments situation, a Payment Gateway is the software that processes the transaction on behalf of the merchant.

A Payment Gateway requires you to have a merchant account with your bank. Once you have established a merchant account you share this information to your chosen Payment Gateway. You’ll then be able to accept payments online, and receive daily settlements and reports. After a period (somewhere between 2-5 days depending on your bank), the funds are automatically transferred from your merchant account to your business bank account. Some banks offer software to help you set up an online store and have preferred payment gateway providers so it is worth talking to your bank first to see how they can help and what costs are involved.

Some major payment gateways for you to consider:

Merchant Warrior

Bambora (IP Payments)

Third Party Payment Processors

PayPal is the world’s largest third party payment processor. Third party processors do not require their merchants to have a merchant bank account as your customers’ payments are deposited into the third party’s merchant account. There are certain advantages and disadvantages to this approach.

Advantages: ease and speed to set up the account and lower establishment costs.

Disadvantages: higher ongoing fees and delays in receiving settled funds.

Because third party processors are less expensive initially, many new and small online businesses choose to start with a provider like PayPal, Paymate, Stripe, Braintree or Pin Payments. As businesses process higher volumes of transactions, a merchant account and payment gateway may be more beneficial as it allows for greater control over cash flow and budgets.

What is PCI compliance?

PCI security standards are a set of requirements that must be followed by all businesses accepting payment from customers via credit or debit cards to ensure maximum security when processing payments or handling customer data. If you’re a business and you accept, process, transmit or store cardholder data, then you’re required to comply with PCI Security Standards to ensure a secure payment card environment. PCI compliance is required of all Australian businesses, irrespective of size.

If your business allows customers to purchase your products or services with a credit card (over the phone, via mail, via a point of sale terminal, or online), then your business is in scope for PCI compliance. The only way to be out of scope for PCI compliance is to not accept credit card payments in any way.

If your business isn’t compliant, you may not have the protection you need to prevent your customers’ data being accessed without authorisation. A single security breach could do damage to your business reputation and sales, so it is vital to be aware of your obligations and commit to remaining compliant.

You can find out more about PCI compliance here.

Creating a secure online payments system

You’ll need to make sure your online payments system delivers an easy and secure experience for customers, while also protecting your business.

Make sure your website outlines security and privacy protection for your customers, so that customers feel confident to use your payment system.

Ensure your terms and conditions are crystal clear, for example your refunds or cancellations policy.

Electronic transactions are subject to the same laws as normal business transactions. In Queensland, the Office of Fair Trading (OFT) helps businesses to understand their obligations under Australian Consumer Law and other industry-specific legislation. You can read more on this topic on their website or find out more about the specific laws governing electronic transactions here.

If you handle credit card details, you may also have PCI & DSS compliance requirements.

Further help:

If debtors and cash flow is a growing concern in your business, it may be time to speak to a professional advisor to help get your finances back on track. You can contact our cash flow experts on 07 3023 4800 or at mail@marshpartners.com.au

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