How to accept payments online: free DIY options vs. full service providers

Have you been meaning to accept online payments (free or otherwise), but not got round to looking at your options? Whether it’s how to accept online payments on your website or using an online shop or seller’s profile, make life easy with our clear, easy-to-follow guide.

As one of our most popular articles we have updated this for 2017.

The success of your business depends on more than just inspiration, determination and perspiration. It depends on getting paid.

Customers expect to be able to pay online. But times have moved on and typing your debit or credit card details into an online form is fast being replaced by smarter options like PayPal or Apple Pay. These brands allow customers to store their preferred payment options safely online, ready for whenever they want to pay for something.

Or, a customer might have an online account with a retailer, again with payment details securely stored, requiring only authentication from them. And with giants like Amazon now making one-click payments the norm, customers take easy online payments for granted.

How to set up online payments

To start accepting payments online, you’ll need to decide whether you’re going to accept payments by credit (or debit) card, or Direct Debit, or both. This sounds simple enough, but each option is a little different.

We’ll start by looking at credit cards.

How to accept online credit card payments

Paying by credit or debit card is a popular, familiar option for your would-be customers. It’s also the usual way that companies and businesses accept online payments internationally. There are a couple of options for this.

1. Merchant account or payment gateway

Merchant accounts are bank accounts that let you accept payment from a credit or debit card, storing your payments temporarily before you transfer them to your business account.

There are lots of mainstream options available for setting up a merchant account, from Sage Pay to Barclays, and you can link it from any of these to your business bank account.

Alternatively, a payment gateway will connect your website to processor networks, allowing your customer to provide card details and then confirming that the cardholder’s bank has approved the transaction before settling the payment. This is commonly used in shops, cafes and restaurants, and again, there are lots of market options available.

2. Payment service providers

A payment service provider (or PSP) allows online shops and websites to accept a variety of payment methods, including credit or debit cards, Direct Debit or bank transfers, through customer online banking arrangements.

A PSP will often make life easier for you, acting as a go-between with you and the bank, and ensuring that the money taken goes to and from the right accounts. With merchant accounts and payment gateways, you tend to end up doing a lot of this admin and cross-checking yourself. A PSP brings everything together, meaning you can accept online payments without merchant account status.

It’s a more hands-off approach, great if you’re not into checking your email every half hour, and because you’re not handling your customers’ financial data, there’s less Payment Card Industry (PCI) compliance to worry about. Most providers will also offer fraud protection options, help with billing and transfer set-ups too, to give you even less to do.

Bear in mind that lots of customers will want to be able to pay on their phone these days too, and not every PSP is set up for this. If it’s important to you or you have other particular requirements, do your research and find out what each brand can offer.

3. Subscription wrappers (or ‘subscription management services’)

Taking recurring payments or regular repeat orders? Subscription management services provide a credit card detail storage facility, allowing customers to submit their details and use these to pay every time. They’ll automate your billing, but you’ll usually still need one of the options above in place to use a subscription management service.

How to accept online Direct Debit payments

You may also be looking to set up Direct Debit for your customers. There are lots of options available but remember, you won’t be getting instant payments with this set-up. It is often, however, cheaper.

Remember to get your provider to break prices down and check that they’ve included online payments as a feature. It’s something they often hide in the ‘optional extras’.

1. SUN, Bacs software and doing it yourself

First things first, you’ll need a SUN.

A Service User Number (SUN) is an ID number unique to you, used when you’re taking payment by Direct Debit. If you’re allowing Bacs transfers, you’ll need to provide this ID, as it builds the record for each transaction. You can apply for one with your bank, and acceptance criteria varies. It will usually take into account things like your administrative capability and financial standing.

Once you’re set up with a SUN, you’ll need the right software. This will be Bacs-approved software that meets Bacstel-IP software and service standards, and will mean you need to have secure connections in place, along with a few other technical requirements. There are lots of options available for this, but speak to your bank first about their requirements, and then do a quick search to shop around for something compliant, but competitive.

2. Direct Debit bureaus and online payment specialists

These third parties will handle pretty much everything for you, either using your own SUN or allowing you to skip the application and use theirs instead.

This all gives you pretty robust security, and again, that hands-off approach if you prefer. They can also help you apply for your own SUN, if you’re keen to do things yourself but not sure where to start. FastPay and GoCardless are just two of the brands you could look at.

You could also look into purchasing Direct Debit Management software, which would give you complete control, plus integration with other systems. It’s expensive though, and will require manual effort on your part.

Security (how to accept online payments securely)

Whether it’s credit or debit card, or a Direct Debit set-up, you need to be confident that your online payment arrangements are secure. Customers expect nothing less, and data breaches are commonplace for UK businesses right now, often costing thousands of pounds in damages, if not breaking the bank.

Check out our 2017 guide to ransomware protection, and if you’re not sure, take advice from a professional. If in doubt, it’s probably best to go for one of the full-service options above and ask about their security practices and obligations. If anything does go wrong, it’s better that your corporate provider’s legal team is handling the issue, rather than trying to do everything yourself.

Online retailers’ insurance

If you’re selling online, in whatever shape or form, risks exist and things can go wrong. We’ve built a special insurance option for ecommerce businesses, designed to keep trading going as usual, even with the odd hiccup. Just tell us what your business is and what sort of products or services you’re selling, and we’ll come back with an online retailer’s insurance quote, including things like seasonal stock cover, and goods in transit.

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