How can I take payments on my website? What this article covers
- How payments online work
- Possible options
- Things to consider
- What Kernow Merchant Services recommend
How payments online work
The volume of online payments have been growing for years and the recent lockdown saw this trend accelerate. There are over 250 million online transactions in the UK each month with around £30 billion spent.
To take payments online, a website requires a payment gateway. This is a secure piece of software that encrypts the payment information. It then instructs the buyers bank to transfer funds to the sellers account. These gateways “plug in” to your website and require a compatible API key. It’s important to check that your website and payment gateway are compatible and can transfer data between them.
Don’t get caught out waiting for funds
The process of moving money between accounts takes time. Although funds are ringfenced very quickly it can be 5 days before all checks are completed and the money is actually transferred. This is where “pending amounts” come from when checking your balance. Some gateway providers shorten this time by effectively providing credit and paying their customers before they’ve received that payment from the buyers bank.
All in one solutions – Convenient but surprisingly expensive
Some users opt for a combined website builder and gateways from companies such as Shopify. These make designing an online shop quick and easy but that ease is reflected in the higher rates charged.
Although Shopify allows you to quickly build a website with low up front costs and populate it with your items, they charge a premium for this convenience for the lifetime of the site. Although a quick and inexpensive way to launch, the longer a site runs and the more money it takes, the more inefficient this method becomes.
Pay as you go gateways – High turnover = high charges
The next group of gateways are those that come as standard when building your own website. It’s common to see Stripe and Paypal on many websites as their software is compatible with most platforms and are the standard providers.
These generic gateways will be what is usually used if using a basic website building service. They’re reliable, don’t have monthly fees and work well, meaning business owners have a practical solution and only pay if they’re taking money. On the downside, processing fees can be high and clearance times long. For example, rates of 1.7% + 20p are typical, for a company selling a lot of low value items this can quickly become very expensive.
Contracted gateways – Surprisingly low rates and get your money quickly
Finally there are gateways that don’t come as standard and usually have a monthly fee, although some companies waive these fees if a customer also has a card terminal with them. Once a business is established and trading more than around £1500 per month it’s worth them looking at what options are out there when it comes to payment processing.
These gateways have low transaction rates and typically faster clearance times. It’s common to see companies paying less than half of what they would via Stripe, Shopify or Paypal. As long as the company is turning over a reasonable amount the monthly fees charged are countered by the saving made on the overall rates. The key thing to check is whether the payment gateway selected is compatible with the platform your website is on. Not all gateways work with all sites.
Things to consider before you commit
Before settling on which gateway is best for your needs there are lots of points to consider. Below are just a few of things we’d look at before recommending the right gateway for your needs.
Typical transaction value.
Volume of sales.
Importance of quick settlements for cashflow.
Time expected to trade.
Delivery time for goods or services purchased.
What other sales channels are currently being used.
Domestic or international sales.
B2B or B2C.
Platform the site is on.
Self managed or maintained website.
By taking all of this into account we can recommend the best solution for your needs and liaise with your web designer/administrator to ensure installation is seamless.
What KMS recommends
Luckily, Kernow Merchant Service can provide unbiased advice on what gateway is most suited to your particular needs. For example, a seasonal or short term shop needing to be set up quickly would benefit from the speed and ease of Shopify but this wouldn’t be suitable if hoping to trade longer term. Someone starting up may like the convenience of pay as you go packages without monthly fees. Someone else may be happier paying monthly in order to receive their money more quickly, improving cash flow.
Ideally we’d recommend a company speaking to us when they’re setting up their website, this ensures the correct systems are in place from day one and we can assist with recommending reputable designers if required. When first starting out there is nothing wrong with a company using Stripe or Paypal to take advantage of no monthly fees but it’s important to plan that when sales reach a certain volume they will switch to a contracted gateway. By speaking to us sooner rather than later we can help pre-plan this journey, assist in the best design for a sales site and ensure your package is both the most suitable and best value for your needs. For more information visit our payment processing page.