E-commerce solutions
E-commerce solutions can vary from a simply online form using a SSL certificate to real time processing of credit card payments to your bank account. Alternatives to building your own realtime processing system is to using services such as PayPal.
Ecommerce solution 1: Using Paypal Cart
If you sign up for a Paypal merchant account, you will be able to insert code into your website that allows you to accept payment via credit card. If you do not have a large number of items to sell, then using the paypal cart is the easiest method to implement. The advantages of using Paypal is that most internet users who have purchased online have a PayPal account, and this means that it is simply a matter of clicking 'add to cart', 'checkout' and logging into their Paypal account to confirm the order and the user has purchased the item from your store. There is no need for them to fill out lengthy registration forms, in order to buy a product. The time involved in registering address, and order details can be laborious and if your buyer is only likely to buy one or two products, then Paypal cart, is an ideal solution.
Advantages
- Easy to implement on any website
- Easy checkout - complete an order in 30 seconds
- Reporting via Paypal website
- Process refunds online via Paypal website
- No need to manage credit card information
Disadvantages
- Paypal is not a bank and there are websites devoted to people who have issues with Paypal's procedures, which in some cases have been harsh and detrimental to businesses who use Paypal. Google "paypal problems"
- Paypal Cart does not allow the user to choose direct bank deposit or cheque as a checkout option and the order only arrives in your email when the payment has been made.
- Cumbersome to update prices
- Limited postage options
- Limited ability to allow customers to choose sizing, colours, etc..
If you have many products, then you need to develop your own database and shopping cart and allow Paypal as one of the payment options. Using your own shopping cart, is more expensive to develop but does away with most of the disadvantages listed above.
Ecommerce solution 2: Using a secure order form
Using secure order forms that send information by encrypted email has the advantage that customer of details and credit card details are then processed manually via a merchant EFTPOS machine. The fees and charges for EFTPOS machines are around 2% plus a small monthly rental. Many merchants already rent an EFTPOS machine and processing customer purchases manually can have many benefits, which include;
- Easy to implement - you only need the form designed, SSL certificate installed and autoresponders sent.
- Not having to process refunds for out of stock items.
- Customers tend to be more accepting of a real person processing their order and being charged for it when the order is filled.
- Lower fees, charges and hosting costs.
- Less programming maintenance
- Confirming the order prior to processing if the order is considered suspicious. The use of stolen credit cards is a large problem, reportedly representing over 7% of all transactions.
- Ability to allow clients a choice of payment methods in the form. eg cheque or direct bank deposit. The costs associated with using direct deposit are negligible and banks may only charge for the transaction. However, this option is only available within your home country. You cannot transfer funds to the bank of a foreign country using internet banking, you must go to the bank and order a wire transfer.
The disadvantages
- Payments have to be manually processed and your company will be responsible for loss and storage of credit card information. Although this method is commonly used, with the ability to pass information through HTTP Post commands to the bank, and hold payments for later processing, this method of collecting credit card information though more affordable, may actually be problematic and outdated.
Ecommerce solutions 3: Using a secure order form linked to a payment gateway
Another e-commerce solution is to use a gateway, like eway. pay pal or paymate. Gateway services allow transactions to move to secure servers where credit card details and personal information is processed. The e-commerce provider transfers money to a holding account and then to the merchant's bank account. Although the fees for these services are quite attractive, the flat rate fee per transaction and percentage value of the entire transaction plus monthly or yearly service fees make the rates more expensive than using the merchant EFTPOS machine.
If you decide to use a payment gateway, you need to determine the value of the average transaction and the volume of sales per month, in order to choose the right plan. The fixed transaction charge means that for small transactions, the percentage of the transaction is quite large. Work the cost of each individual sale and then average the costs by the volume of monthly sales and add the monthly service charge (remember to average fixed yearly charges and add into the equation). The percentage of total sales will be determined by dividing the monthly charges by the value of total sales. Compare different payment gateway pricing.
Many businesses should be wary of spending too much time creating huge online catelogues without careful planning. Many shopping cart systems do not index well on search engines, if at all. If you do intend to promote your products online and you don't have lots of money to spend on print or television advertising, then you need to ensure that web pages are created for featured products and websites are coded to XHTML standards, with proper keywords, metatage, titletags and web page descriptions.
Many startup businesses can do well by using ebay to sell products online. If you have a feedback score of 5 or more(meaning you have had 5 positive feedback comments from ebay purchases or sales), then you can utilize the 'buy it now' option which effectively means that you can set your reserve price and 'buy it now' at the same price, thus avoiding the bidding process altogether. Ebay will allow you to build a virtual store and obviously this is not going to be the best alternative, but it is cheap. If you are selling a niche product, you can build up a list of email addresses and contacts that will help you when you set up your own website. Some businesses even use ebay as a means of cheap advertising and direct traffic from ebay items to their own website. One of the largest online traders in Australia started their business on Ebay.
Other ways of marketing include encouraging existing customers to visit your website with changing website content, featured articles, specials, promotions and give aways and by using advertising in magazines, leaflets and brochures.
Ecommerce solutions 4: Using a secure order form or shopping cart system linked directly to banking system
Linking your payment directly to your bank will require approval from your bank. It also requires purchase of an SSL certificate, and programming for the form, autoresponder emails, and API.
Recently, the NAB has introduced a successor to NSIPS is called "NAB Transact".It is a relatively new platform and although many developers in the past have steered away from bank gateways because they were complicated to set up, the NAB has really stepped up to provide a solution that is secure, because the credit card processing is done on the NAB servers.
If you are serious about ecommerce, using a bank gateway, is a much better alternative to use Paypal and it is fully featured. You can even set up the system to take recurring transactions or delayed transactions. All you need to do is the form design and you can pass the info into a web database or have the form info sent to you by email but the credit card processing can use http post to be processed entirely over the NAB servers. The fees are reasonable, and implementation is not as difficult but it is a solution that requires more work than any of the methods above.
Payments can also be delayed to check for fraud, verify availability of stock, and refunds can be processed via a web interface.
Conclusion
Regardless of the method you choose to implement, all websites should allow customers to pay by alternative methods, such as cheque or direct bank deposit. The benefits of direct bank deposit is that credit card payments to businesses are subject to chargeback. Every year millions of credit cards numbers are stolen, and it is a growing and well organized industy.
The merchants, not the banks carry the risk of fraudulent transactions.
Our recommendation, is that if you are an Australian business that want to allow your customers to pay by credit card online, that you consider linking your website to a banking system.