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Accepting Online Payments

When you create a website you will want to be able to accept orders for goods or services.  As part of this, you will need to carefully consider how you will accept payments from your customers over the internet so as to ensure customer confidence and security without incurring excessive credit card processing fees, and without leaving potential customers in any doubt over the security of making payments online via your website.

There are two parts to this: Creating a Shopping Basket (or Shopping Cart) and Processing Online Payments.

Creating a Shopping Cart

If you want to create a shopping cart for your goods or services, it is easiest to use a script which automatically generates a set of web pages based upon a database - this ensures that your web site can easily be updated and customers are not left disappointed because something is no longer in stock.  The database can also be used to store other internal information to assist with your own administration, such as location of the stock items, re-order numbers and even trigger levels for re-ordering.

There are various languages which you can use to turn your database into web pages, but we ourselves use Perl as it is fast and easy to understand.  The script can interrogate the database each time that it re-generates the web pages to automatically notify you should any items be below minimum stock levels and therefore trigger re-ordering on "just in time principles".   You can either re-generate the web pages each time that a visitor asks for details on your items, or preferably, you can run a cron-job on your server (iPower is one of the few low cost web hosts to provide this facility) to run the program which generates the web pages automatically after a set period of time.  This ensures that your customer see up to date information, but are not left waiting for web pages to load.

If you wish to explore this possibility, feel free to contact our team of experienced programmers who would be happy to discuss your needs and to design a database and web page generation programme to suit your requirements.

There are also low tech solutions to creating an shopping cart, such as PayPal's shopping cart tools (which provides you with the code to create "Buy it Now" buttons).  This is an excellent, cheap version, but is limited in the way that shipping charges can be calculated. Some hosting services, such as iPowerWeb also offer a choice of free integrated shopping carts which can be added simply to your website and provide all the security which your visitors require. 

Otherwise, you can look at all singing, all dancing integrated solutions, such as those offered by WorldPay.  Although these solutions may appear expensive in the first instance, they are able to adapt their solution to your specific needs, including database, shopping cart and payment services.

Processing Payments Online

In order to accept credit card payments, you will need to decide whether your business will be mainly accepting credit card orders over the internet, or whether you need to provide for people calling into your business premises, or placing an order over the telephone (or even a combination of all three).

Generally, people will only purchase items over the internet, if they are assured of a secure transaction, through entering their details on a form which is held on a secure (https://) server.  This allows you to obtain a security certificate for your website and a reassuring closed padlock symbol will be displayed in the visitor's web-browser.

For security reasons, you need to avoid asking the customer to enter credit card and other details in a plain form, or in an email to yourself, but on the other hand, it ruins the feel of your website if visitors need to telephone you in order to place an order. 

Having got the credit card details, how do you actually process the payments??

If you already have a merchant account through your bank, most banks will provide you with software in order to enter the credit card orders and check the details online, although some banks impose a hefty charge for this service.  You can of course enter the details into any card swiping hardware, which you may already be renting from the bank, as though you were performing a face to face transaction.  Whichever method you choose is entirely up to you, but it does have the disadvantage that you have to manually enter every transaction.

The other option, is to use an online credit card verification and ordering service (also known as Gateway Software).  This is software which takes each payment as they are entered by the customer through your shopping cart, verifies the card details, takes payment and sends confirmation emails directly to yourself and your customer.  It may even automatically deposit the money into your bank account.  The cost of Gateway Software varies greatly between suppliers, so it essential that you thoroughly research the costs involved and also the reputations of these companies.  Most Gateway Software providers will insist on you having your own Merchant Account already set up, which can prove expensive if the only form of trading you do is over the internet.

The type of scheme you use will depend upon the type and size of each transaction you expect to make, as well as the frequency of transactions.  We would recommend that small businesses who do not need a merchant account for face to face transactions, and who do not anticipate a large number of high value sales, should consider PayPal or WorldPay.

Using PayPal for Online Payments

Accept Online
                                                  Payments through
                                                  PayPal - no Setup or
                                                  monthly feesPayPal will process credit card payments for you online, send confirmatory emails and even provide their own secure shopping cart (or shopping basket) for use with your website.  They allow you to request money from and send payments to people with an email address in most countries throughout the World.  However, the system will not permit you to accept credit card payments over the telephone or in person, since all transactions have to be carried out using unique email addresses.  PayPal does not charge any set up or monthly fees, but does take up to 3.4% plus 20p per transaction.  You also have to initiate withdrawal of funds to your bank account, which is subject to a withdrawal fee of 25p if you withdraw less than £50 (and free for payments over this).  We have also found that payments from abroad tend to attract a slightly higher fee than domestic payments.  The main downside is that transfers to UK bank accounts currently take 7-10 working days.

PayPal offer a quick payment link to allow non-members to make credit card payments without having to join PayPal first.  However, there are plenty of horror stories about PayPal cancelling accounts and other complaints about their practices. We have found these to be unfounded in our experience, and like any other credit card payment, the best protection which a seller can have is to ensure that they only send items to the buyer's verified PayPal postal address and always use a form of postage which tracks the package and ensures that a signature is obtained on delivery (PayPal will need to see this signature as proof of delivery in the case of a dispute).

PayPal fees are based on the amount of transactions through your sellers account in a given month, and as at 20th March 2006 are as follows:

A Cheaper Alternative To PayPal?

If you deal with a lot of customers in the UK, you might also wish to consider using NoChex, which allows you to accept both credit card and debit card payments from within the UK.  Normally, you can only receive payments from other NoChex NOCHEX provide a
                                              simple means of accepting
                                              UK debit and credit card
                                              paymentsmembers and have a maximum balance on your NoChex account of £90 - if you need to receive more money, then you will need to obtain a Seller Account. Your customers do not have to join up to the program if you qualify for a Seller account and they are paying less than £100.  Customers registered with NoChex are limited to £300 per day which does make this less acceptable for higher value sales.  NoChex differs from PayPal in that all payments are guaranteed - there is no charge-back facility on payments, which makes it more secure for sellers.  Fees are also lower at 2.9% plus 20 pence per transaction - withdrawal of your funds will also only take 3 working days and is free if you withdraw more than £50 (25p fee for withdrawals under that amount).

NoChex do also offer a fully fledged merchant account if you process more than £1,000 per month with no monthly, or annual fees and only a £50 setup fee.  The NoChex merchant account will accept credit card payments from a large number of countries and fees remain at only 2.9% plus 20 pence per transaction (although the percentage may increase for some industries)

Processing Payments Online & In Person

If you expect to take lots of high value orders, then we would recommend that you consider WorldPay. WorldPay offer both a low cost solution for people who already have a Merchant Account and wish to take automatic credit card payments over the internet, and a solution which is similar to PayPal.   

WorldPay also has the added benefit that it is linked to "Verified by Visa" - this is a system run by Visa which allows visa card users to create an account specific password and phrase which is shown every time that they enter a credit card transaction on line.  It is an added security measure and provides added assurance to the credit card company that the person placing the order is the credit card user.

WorldPay is priced on an individual basis (and equates to a one off setup fee of roughly £100 plus VAT), however, the charges for the full payment solution, similar to PayPal is £100+VAT setup fee plus £160+VATpa.  There is also a charge of 4.6% on every transaction, which makes this much more expensive than PayPal, although they do offer the option of being able to take credit card details by telephone, mail or fax as well as just over the internet (this is subject to an additional setup charge of £100+VAT).  You are also able to choose to add additional fraud protection controls, such as blocking orders from IP or email addresses which appear to be suspicious for a setup fee and monthly fee (both £30 plus VAT on our quote).

You may find that your website hosting provider offer cut price credit card processing facilities (normally with no setup charges and smaller monthly fees).  It is always therefore worth considering your choice of web hosting provider very carefully.


Whatever system of payment you decide to adopt for your website, it is essential that you consider the way in which your package is sent out to your buyer in order to ensure that the package is tracked, insured for its full value and a signature obtained on delivery (see above).  We would recommend using Special Delivery if sending items by Royal Mail, or even considering the use of a low cost parcel delivery service, such as Parcel2Go, which we have reviewed on our RWAP Services website. At the very least, it is now essential that you obtain a free certificate of posting for any items which you send - although the item will not be tracked or a signature obtained, if it does not arrive at its destination, then Royal Mail will insist on one of these if it is to pay any compensation for a lost or damaged item (first class post carries a maximum of £30 compensation).

More details on forms of electronic payment can be found on the DTI and Scottish Enterprise Electronic Payments site:


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