Hopefully this web page will explain some common questions we receive a little better. Firstly if you want to receive any credit card payments from any source, you will need to set up a 'Merchant Account' at a bank of choice. This is in addition to your normal 'Business Account' but does not have to be with the same bank.

Merchant accounts are easily set up and usually incur a small set up fee of around $300. This can sometimes be negotiated to $0 if you badger them enough and insist that you will be bringing in a lot of revenue through credit card sales. You can also negotiate the transaction fee which is between 1-4%. If they still won't move on the set up fee or setting up your account, threaten to take your business to another bank. This usually gets them moving!

Next you will need to make a decision on whether you want to receive payments via email or via an electronic payment gateway. By using the manual credit card processing method via email, it enables you to incur fewer expenses but more time will be spent processing the payments. On the other hand a real-time credit card payment gateway will offer a secure and no hassle deposit, although ongoing costs can sometimes exceed your sales revenue.

Initially email orders are encrypted using SMIME, and are decrypted by the merchant to retrieve the order and payment summary. Next the credit card number and card holder will need to be telephoned to the bank by the merchant in order to authorise the payment. The payment details including credit card number, card type, expiration date, date of processing, authorisation number and total amount charged, are then recorded on a credit card slip provided by the bank. A merchant summary is then provided to the bank along with all the payment slips for processing. Each credit card payment will take about a day or so to process, after which the bank will deduct a merchant fee from the total amount charged and deposit the remaining amount in your bank account.

By using an electronic payment gateway, this automates the whole transaction process so that the credit card is authorised, debited and deposited into the merchants account in a matter of seconds. Although by using a payment gateway, not only will the banks deduct their transaction fee, but the gateway provider will also charge the merchant a transaction fee expressed as a percentage of sale or set figure amount. This amount varies according to the monthly or annual plan that the merchant is on, and the amount of setup costs involved. Monthly plans are somewhat likened to the mobile phone plans that are available through network providers, for example the higher the plan costs, the lower the transaction costs. There is a usually a plan to suit every merchant, but generally annual costs are about $1000, but may be as low as $300 depending on the quality of service provided.

It is important that you also understand the difference between the gateways as there are two main kinds; transparent and non-transparent.

Transparent gateways allow the customer to enter their credit card information on the merchant's own web site, whereas the non-transparent gateways only allow payment processing through a 3rd party web site, such as a bank or some gateways. It is highly recommended that payments are processed through the merchant's own web site, as the user may feel less confident about being redirected and making a payment through another web site that they may not know anything about. It also looks a lot more professional to the customer when the whole transaction process is carried out within the one web site. Bizar Shop does exactly that and also connects to numerous payment gateways in Australia and around the world.

Virtually all banks will try and sell their own non-transparent payment gateway, however don't be tricked into this. You do not have to use their service, as their are many other 3rd party transparent gateways that will connect to virtually any bank in Australia. Once such gateway we highly recommend is Direct One.

It is generally not recommended for small businesses to use a payment gateway initially as the costs involved can be substantial. Although if you are receiving more than a few payments each week, it may be advantageous to use a payment gateway due to the time saved on manual processing.

Once you have decided which payment method to use, all you need to do now is to plan on how you want to start selling on the web. For more information on selling goods and services on the Internet, please see our dedicated e-commerce page.

If you still have some unanswered questions, please contact our office and arrange for a consultation or follow some of the links below....