eCommerce Payment Processing
Recommended Payment Processors
Internet Merchant Account Providers
How Can I Start Accepting Credit Cards?
There are two types of credit card processing methods; real time and manual.
a) Real Time Transactions
A 'real time' transaction is one which is processed immediately.
Here's how it works:
When a customer makes a purchase, your website communicates with the banking networks via a payment gateway. The bank verifies the status of the card and if successful, approves the transaction.
The entire process is done electronically and takes just seconds to complete.
b) Manual Transactions
Unlike a 'real time' transaction which is processed immediately, a manual transaction is processed offline after an order has been received.
For example, a merchant may receive an order via telephone, mail order or email and process the transaction with an EFTPOS terminal.
Accepting Real Time Credit Card Transactions
To accept real time credit card transactions, you have two options:
- Get your own Internet merchant account from a bank and signup with a payment gateway service.
- Use a third party payment processor service like PayPal.
Here's an explanation of each service:
1. Merchant Account
A merchant account is an account created by a bank or financial institution to receive credit card payments and deposit them into your regular bank account.
Merchant accounts can be used by businesses that are processing transactions:
- In a retail store
- Over the phone
- Through mail order
- Over the Internet
A merchant account does not process any transaction information; it only holds the funds that have been successfully processed by a payment gateway.
An 'Internet Merchant Account' is a merchant account designed specifically to process online transactions.
IMPORTANT NOTE: An Internet merchant account is distinct and separate to any merchant account that you may already have with a bank (i.e. retail EFTPOS machine).
All major Australian banks provide merchant accounts for Bankcard, VISA and MasterCard. To accept American Express and Diners Club payments you will need to apply with each provider individually.
TIP: If you are going to apply for a merchant account in Australia, we recommend St George Bank.
The problem with most banks is they view small businesses as risky ventures and therefore asks for reams of information before they will approve your account.
We believe St George offers the most competitive eCommerce solution for small businesses.
Keep in mind that your Internet merchant account is completely separate from your day-to-day business banking account. This means you don't need to switch banks to apply for a St George merchant account.
Simply nominate your business bank account (i.e. ANZ, CBA, Westpac, etc) and St George will automatically transfer your settled funds at the end of each day into your regular bank account.
2. Payment Gateway
Obtaining your merchant account is half the process.
From here, you'll need to sign-up with a payment gateway provider to allow you to process transactions online.
A payment gateway acts as the 'bridge' between your website and your merchant account.
The job of a payment gateway is to:
- Communicate with banking networks (Visa, MasterCard, etc)
- Verify credit card information
- Approve the delivery of funds to your merchant account
A Payment gateway verifies transaction data such as:
- Identification of the merchant (e.g. Widget World)
- The purchase amount (e.g. $50)
- The credit card holder details (e.g. Joe Bloggs, Visa Card, 4564-4564-4564-4564, Exp 04/07)
3. Third Party Payment Processors
Third party processing services are basically a payment gateway and merchant account rolled into one.
The difference is a payment processor does not require an Internet merchant account and can settle funds into a regular bank account.
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