Ecommerce Merchant Accounts For Australian Ecommerce
Accepting Online Credit Card Payments From Your Customers
One of the most important aspects of building an ecommerce web site is the ability to collect and process payment for your product or service from your customer.
There are several payment options that you can offer on an ecommerce web site, including cheque or money order, bPay, direct bank deposit, and credit card.
However the most common form of payment for products or services over the internet is by credit card. Of course the other forms of payment should not be ignored, especially for local customers, as not everybody has or wishes to pay by credit card.
From experience we know that anywhere from 60 - 90% of your potential customer base will choose to pay by credit card. If you cannot accept credit cards as a payment option on your then web site then you are potentially losing from 60 - 90% of your customer base.
If your potential customer lives overseas, then a credit card is often the only convenient and cost effective method of collecting payment from them.
How To Accept Credit Card Payments From Your Web site
To process credit card payments you usually have 3 options.
- Use a third party credit card payments processor (Examples are: PayPal, PayMate, 2checkout, IBill etc).
- Get an Internet approved merchant account from your bank (example: Westpac, ANZ, National, StGeorge etc).
- Get an Internet approved merchant account from an overseas ecommerce provider (Examples: PayQuake, WorldPay).
There are advantages and disadvantages to each option, of which we will attempt to cover here.
Option 1: Use a third party credit card payments processor.
If your business is just starting out, and you can't afford a merchant account right now, or you can't get approved for an Internet enabled merchant account, then a 3rd party credit card processing company may be the only viable choice to get you started.
3rd party credit card companies earn their money by taking a fixed transaction fee (normally between 30c US to over a dollar US) as well as a percentage of your product or services sale price (anywhere from 2.9% to 15%). 3rd party processing is a great option for most Internet businesses where obtaining a merchant account is much too expensive or hard to get.
The good new is that these accounts are fairly easy to get, and the setup fee for this type of account is usually minimal (anywhere from $0 to $99) and there are usually no monthly or yearly account fees.
The bad news is that some of these 3rd party payment processing companies are charging up to 15% per sale in transaction fee's, and many will only accept payment in US dollars or Euro's. Also, because they are based overseas, they also do not have to comply with Australian regulations, and some have had questionable business practise's. Some have even closed down, taking all of their customers money that has been held in their accounts with them.
There are however 2 of these companies that appear to be quite solid, and charge reasonable transaction fees. These are 2checkout.com, & PayPal
Probably the better known of these 2 companies is PayPal.
PayPal is owned by the giant eBay corporation, so you can be certain that they have plenty of financial backing behind them, & a reputation to preserve. They also have some of the cheapest account keeping and credit card processing fee's in the industry, and they also now accept payments in Australian dollars, as well as US dollars, Euro's and Japanese YEN.
You used to have to be a member of PayPal in order to make a payment with them, however this is no longer the case. Now anybody with a valid credit card can make a payment through PayPal. Credit cards accepted are Visa, Mastercard and AMEX, so this covers the vast majority of Australian and overseas credit card holders.
Our ecommerce web hosting plans includes a plugin, that will connect your shopping cart directly to the PayPal payments system, so now anybody can setup an ecommerce web site quickly and cheaply.
If you are just starting out with an ecommerce web site, then PayPal would be an excellent choice to get you started. Once your business is established however you will probably want to look at getting your own Internet enabled merchant account. A merchant account will add additional credibility to your web site.
Option 2: Get an Internet approved merchant account from your bank.
If you have a good relationship with your bank then you may be able to get an Internet approved merchant account from them. Be aware that if you already have a merchant account with your bank, it must be approved for Internet and telephone payments before you can accept credit card payments from the Internet.
Before you apply for an Internet merchant account, you should have a business plan prepared, as most Australian banks will want to see one before considering your application.
Unfortunately Australian banks can be notoriously difficult to deal with to get an Internet approved merchant account, and can take forever to approve (or deny) your account (usually around 6 weeks). They usually also require that you have a good deal of money deposited with them, or a home loan with them as well as some other form of collateral.
An Internet approved merchant account from an Australian bank can also be very expensive. Most charge a monthly fee (from $22.00 to over $55.00 per month) as well as a credit card transaction fee (from 2% to 5%). On top of this however, they normally require that you use an approved third party payments gateway, who will also usually charge a monthly fee, as well as a transaction fee on top of the bank fees. So you are not just paying once, but twice.
We do not have any personal experience, however word from some of our customers is that the StGeorge bank is one of the easier and cheaper banks to deal with with with regards setting up an Internet approved merchant account.
Option 3: Get an Internet approved merchant account from an overseas ecommerce provider.
If you do not have any luck with getting an Internet approved merchant account from an Australian bank, or you find their fees and charges to be a bit hard to swallow, another option you may like to consider is WorldPay.
WorldPay is an important part of The Royal Bank of Scotland Group, the 5th biggest banking group in the world, so has plenty of financial backing & credibility. WorldPay payment solutions are trusted by thousands of businesses, big and small.
Unlike most overseas merchant account providers, they do not require you to have a banking account in the same country as the merchant provider (E.g. most US based ecommerce providers require you to have a US based banking account).
We have been using WorldPay for processing our own credit card payments for the past two years without complaint.
We find WorldPay's customer support to be superb, and they are one of the cheaper options available for an Internet merchant account. They also provide their own payment gateway, and are very easy to integrate with most shopping carts. The majority of shopping carts, including the shopping cart included with our ecommerce web hosting plans already has a WorldPay payments plugin available.
While not as cheap an option as PayPal, WorldPay's fees still work out much cheaper than the majority of Australian bank / payment gateways options, and approval is usually much easier and quicker to get than from the Australian banks.
WorldPay has been setup from scratch for the sole purpose of Internet credit card processing, so has many features & options that are not yet available from the Australian banks.
WorldPay is also more trusted by shoppers than PayPal, giving your web site more credibility, which also means increased sales.
The advantages of using WorldPay are as follows:
- Acceptance of multiple currencies - You can choose from any of over 100 different currencies to accept payments in, including Australian dollars. Three currencies of your choice are included as standard, and you may choose to accept any no. of other currencies for an additional setup fee. An example of how the multiple currencies feature works is as follows: You may be targeting the Australian market, European market and US market for your products and services. You can have a different order page for each market. For the Australian market payments will be processed in Australian dollars, for the US market US dollars, and for the European market payments will be processed in Euro's. You can set the price in one currency, and the other currencies will automatically be adjusted according to the exchange rate.
- Relatively low fee's - While not as cheap an option as PayPal, WorldPay is also far from the most expensive option, and cheaper than many of the Australian banks. The extra sales you will get from your web site from using WorldPay over PayPal will soon make up for any extra expense. For full details of WorldPay's fees click here.
- Faster approval time - You can be approved and up and running with WorldPay in under 2 weeks. Many Australian banks take 6 weeks or more to approve (or deny) your application.
- More likelyhood of approval - Many web sites who have been rejected of an Internet merchant account application by an Australian bank has had approval granted by WorldPay. Of course your web site must fit inside a certain risk profile before approval will be granted by WorldPay, so approval is not guaranteed.
- Choice of options to make accepting payments easier - You can process credit cards in real time on your web site, use deferred credit card processing, accept credit card payments over the phone, and accept subscription (recurring) credit card payments. Many of the banks do not offer or allow many of these features.
- Disputes resolution procedure - If a customer says that they did not receive a product or service, there is a disputes resolution in place to help resolve the issues and thereby hopefully avoiding a chargeback.
Click here to find out more about WorldPay's payment systems.
Note: We are a WorldPay affiliate partner. If you require any advice about gaining an account with WorldPay, please do not hesitate to contact us.
Preventing Credit Card Fraud
An unfortunate fact of life and business is that there is always somebody who wants something for nothing, and there are people who are prepared to lie, cheat and steal to get it.
When selling goods and services over the internet, you are bound to get the occasional fraudulent order using stolen credit card details. It is important that you have your own fraud prevention systems in place, as your payments processor will not always pick up that the credit card details being used are stolen. We can advise our customers on suitable fraud prevention procedures to help prevent credit card fraud.
Complete Ecommerce Packages
We can supply complete ecommerce packages that have everything included for a successful Ecommerce web site. Click here for further details.