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Jun 17, 2009

Show me the money

Dave Howell investigates which online payment system is right for your store

Dave Howell investigates which online payment system is right for your store

According to the latest figures from APACS, the UK payments association, electronic spending has increased year-on-year since card payments overtook cash in 2004. The credit card is now 40 years old and shows no sign of releasing its grip as the favoured method of paying for good and services online.

The internet as a retail space continues its meteoric rise. Online businesses are seeing a trend emerging whereby the payment methods they offer are expanding and diversifying. Your ecommerce site must offer a range of payment options to its visitors to ensure they can make their payments quickly and securely, but the question is: which payment methods do you choose?

HIGH-PROFILE PLAYERS
Traditional merchant accounts that high street retailers have used for decades have been joined by their online counterparts as clearing services from vendors such as WordPay, NetBanx, NoChex, E-Clear and Secure Trading have became high-profile players in the sector. Understanding that smaller enterprises also need credit card clearing gave rise to services such as Protx with its low transaction costs.

The online shopping mall has also evolved significantly in recent times. Here a retailer can set up a store within a virtual shopping environment. Often associated with these platforms are new payment providers such as BT’s Click&Buy, Google’s Checkout and PayPal.

Traditional credit cards from the main two suppliers have also not stood still. Reacting to their customers’ concerns about security when making payments online, both MasterCard and Visa have developed new security systems that your online store can use. You can learn more about SecureCode on the MasterCard website (www.mastercard.com/us/personal/en/cardholderservices/securecode/index.html) and about Verified by Visa at: www.visaeurope.com/merchant/handlingvisapayments/cardnotpresent/main.jsp.

Is it important to look closely at the costs that your online payment clearing services are charging you. Systems such as PayPal, which is closely linked to eBay, can become expensive over time. Services like Protx are attractive for smaller enterprises, but check the services on offer to ensure they can cope with your store’s payment clearing requirements.

M-COMMERCE COMETH
Ecommerce is now an established component of many sports retailers, but a new force is on the horizon that could add a new facet to digital commerce. The statistics speak for themselves: there are over three billion mobile phones in use across the world. Over half of the world’s population has an active handset. When you contrast this with just over one billion PCs in use, a move to more mobile transactions seems inevitable.

A universal payments infrastructure isn’t yet available that consumers recognise and will use. E-money is still a minority technology that is seen as an interesting gimmick, whereas in Japan systems based on the FeliCa chip are commonplace. With more payment technology platforms in development, the future looks increasingly set to become mobile, with your customers buying goods with their handsets. Your website will have to support these payment methods as customer demand increases.

And what if your mobile phone was your credit card, debit card, travel card and micropayment system all rolled into one? Your customers would decide what kind of payment they would make, depending on where they were shopping and what they were buying. More integration across all payment systems is also developing fast. Expect your current credit card payment supplier to offer this kind of service over the next few years as the technology develops.

Companies such as PayPal already have this service in operation. The practical upshot for your website is that your customers can pay for goods with their PayPal account, credit card or via their mobile. Supporting these payment gateways differentiates your business in a crowded marketplace. And as there are currently 70 million active PayPal accounts, gaining even a small percentage of these customers is commercially significant.

CHOOSING A SERVICE
With a wide choice of payment options to choose from, it is important to match the payment services on your website to the requirements of your customers. If you already have a merchant account, your bank could offer you the best deal.

If your online business is based on an eBay store, then PayPal is your obvious choice as this payment system is completely integrated into eBay. As already stated, keeping a close eye on transaction clearance costs is essential when using this system.

Online search is one of the key ways in which customers will find your store. Coupling a payment system to your natural search is a good way of delivering a seamless buying platform to your customers. Google’s Checkout can provide this kind of functionality.

From the point of view of an online store, the integration of several payment systems with the checkout and trolley platform must be flawless. Consumers today are web savvy and are accustomed to fast, easy-to-use payment systems, which enable them to use the payment method of their choice. This doesn’t mean you should load your website with every conceivable payment mechanism, however.

What you should do is research your existing customer base and ask them what additional payment methods they would like over and above standard credit and debit cards. Move slowly and test any new payment system with a small group of products before rolling it out across your entire site. And keep an eye on mobile payments, as they are coming to your store soon.

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