open

I Am A Startup.
How Do I Accept Online Payments Securely On My Website?

After the paperwork hassle, you’ve finally done it. Agreements are in place, the business plan is rocking, financial projections look optimistic. Your online business is all set up for launch. But are you ready to welcome your customers with a smooth payment experience?

How to accept online payments on my website?

Whether you’re a webshop, a gaming merchant or a business that requires pay-as-you-go or subscription-based payments, accepting card payments online from customers is sort of a given in the Internet of Things marketplace.

You do some research online and stumble across some concepts: online payment gateway, merchant account, acquiring banks, card schemes, chargebacks and disputes, payment facilitators. It gets a bit messy and confusing.

As a merchant, you need to take an informed decision. The choice of a payment provider can make or break a startup. High monthly administration costs, high processing commissions, costly chargeback fees and even account setup costs or reserves deposits to cover risk are quite frequent. Startups cannot provide a transaction history. This is fundamental for payment gateways to calculate the commission rate and the potential reserves amount based on previous approval ratios for transactions, chargeback and fraud rates. Without this document, a startup will have to provide financial projections that enables the provider to do an estimate of your business and hence provide you with the pricing.

What will the online payment gateway and the acquirer look at before I am finally able to accept credit card payments on my website?

Company registration and information and a whole stack of documentation to confirm this information
The level of risk of your business. Some businesses are riskier, meaning that the acquiring bank or the online payment gateway will look at your business model and estimate how likely it is for the transactions conducted on your website to be subject to fraud or chargeback (client’s refusal to accept the payments issued from their card). You certainly don’t want a high chargeback to sales ration on your website- this is a red flag and may get you rejected with most payment processors.
Here’s a very brief and general classification of industries based on the risk factors for online payment processing.

Low-risk industries                         

Global retail, like:                            
Clothing                                         
Home decoration                            
Food                                              
Office supplies                               
Electronics                                    
High-risk industries
Gaming
Online gambling and casinos
Adult entertainment
Tobacco
Pharmacy Supplies and Vitamins
Ticketing, Travel, Airlines

Even if you are high a risk business, you may still be accepted by your payment processor of choice, if you provide information that can warrant for the legitimacy of your business: licence, proper documentation, a clear business model.

The monthly transaction volume. Generally, an online payment gateway will provide tier pricing. What does that mean? That you will be able to accept online payments on your website at a commission per transaction that depends on the volume of transactions per month. For online businesses that are already up and running, this calculation is based on their transactions history. For startups however, you need to provide your financial projections, so basically the estimate volume of transactions for the foreseeable future.
Geopolitics. The geo-setting is an equally important factor. You may for instance have done some research online and figured out that you want to process online payments on your website via X or Y company. But the question is- does X or Y board businesses from a certain area? Some payment gateways will only work with merchant accounts in EEA (Eastern European Area) or even only some countries in EEA. Others work with North America or APAC (Asia-Pacific) or simply apply different commissions for EEA -based vs non EEA-based businesses. Before starting to apply with an online payment gateway, you may do a quick research online first. However, if in doubt with the terms and conditions of the payment processor, feel free to drop them an email regardless- you never know if you’re in luck.

How to select the best online payment gateway to accept card payments on my website?

Start with the payments methods you want to provide.

You know you want to accept credit cards on your website.But are there also some very popular alternative payment methods in the geographical regions you are targeting? Like e-wallets, checks, bank transfers? Then you should probably make sure your online payment processor can help you integrate those as well. Mind that the payment experience on your website is crucial for acquiring market share- if you cannot provide your customers with convenience, they will not go out of their way just to buy from you. Do you research long and in advance!

Use comparison sites for online payment gateways.

These websites enable you to look at multiple payment providers at the same time and even ask for a customized offer from several online payment gateways. Such an aggregator site is About-Payments.com.

Look not only at commissions, but at all rates and management costs for your merchant account.

So you know that X company takes 2.9% commission per transaction. And Y company has the same commission. Or slightly more. But what about the other commissions that a payment gateway charges for? Have you inquired over the setup costs? As a startup, you may want to find a payment processor who won’t charge you for the setup. Is there a monthly fee for administration or maybe a minimum monthly fee that you are charged regardless of your volume?

Do you have the technical resources to integrate the API? Well, you might want a company that makes it plain easy to integrate it yourself unless you want to pay your developers to do so. Are you PCI compliant? The PCI DSS regulations are set by credit cards companies (Visa, MasterCard, American Express) and must be complied with by any business before authorizing them to accept credit card payments online.

Getting a PCI certificate is a long and costly process. The right online payment gateway can provide you with a solution such as hosted page, which allows you to take card payments via the payment gateway’s payment page without having to obtain your own PCI certificate. More cost-convenient, right?

Do some online research regarding customer feedback.

Even so, cost is not everything. There are some giant payment companies with a surprisingly low score from their clients. Some payment processors may be overwhelmed by the number of merchant accounts or may simply disregard some of them- especially the low volume merchants- because of their low profit potential. In the meantime, you cannot afford to wait around for answers while your payment system is down, your merchant account is temporarily blocked or your settlements are on the queue while providers send you their monthly bills.

As a startup, it might be best to team up with another startup- one who has the interest, the time and the dedication to support you throughout the application and further.