 Trading online can maximise your turnover, as well as increase your competitiveness. The Forrester Report (November 2004), quoted that the UK is currently Europe 's largest ecommerce economy with two-thirds of consumers having shopped online. More importantly Royal Mail predicted that by 2010 internet sales will occupy 15% of total retail sales. If you want your company to grow, and maximise turnover, you seriously need to consider trading online.
Trading online is not though as simple as it sounds, it involves:
- Merchant Service Accounts
- Trading with Customers that are not present
- Software that need setting to enable the trading functionality
 Merchant Services
There are two ways of acquiring a merchant services account, either through an ACQUIRING BANK, or through a PAYMENT BUREAU.
Acquiring Banks refers to Banks either on the high street or online, that you do your business banking with. To obtain a merchant service account, you apply as you would apply for a business bank account, and go through their designated process. While the banks provide you with the account, you still need to purchase the right software, like shopping carts, PSP software (this collects the credit card details and enables the transaction), etc. Some banks provide the software, but most don't.
Payment Bureaus, are companies such as Paypal and WorldPay that provide you with a complete trading solution.
Trading with Customers not present
It refers to receiving payments over the phone, letter, email, etc. To enable such transactions again you need to refer to a bank, which will issue you with the relevant account. Because of the nature of the transaction and the high risk of fraud, certain security measures need applying, so the whole process can take some time to come to fruition.
Trading Software
As mentioned above the software that need employing to facilitate online payments are:
- Shopping Carts
- PSP
- Merchant Account
Shopping carts enable potential customers to select the products they wish to purchase, and continue to shop uninterrupted. When they finish their shopping, they can click on their shopping cart, and see all the products they selected, including the charges involved and pay for it together.
PSP stands for Payment Service Provider, and it is the software that registers your customers' credit card details, checks for validity and completes the transaction. This needs obtaining from an authorised financial institution.
Merchant accounts, function like business bank accounts, and it is where your customers payments are stored. You can then transfer the funds to your ordinary business account.
Cost of Trading Online
Each financial institution charges differently. Payment Bureaus are a lot easier to do business with, and opening an account can take a few days, but the charges involved are a lot higher, plus most of those institutions carry out the payment on their website, which can look unprofessional on your behalf.
Banks on the other hand, charge less, but the process of setting up a merchant account can take weeks. However the payment facility is integrated with your website, so your customer remains at your website, throughout the trading process.
Generally there are different methods of charging:
- An initial fee for setting up an account, and different percentages of commission depending on the credit card involved, per single transaction.
- Different percentages of commission depending on the credit card involved, per single transaction, plus a percentage of commission calculated on the annual turnover.
- Monthly payments, plus percentages of commission, etc.
You need to be very careful when selecting your financial provider, because you can end up paying thousands of pounds on charges, which can dramatically slice your profits.
Kareta Consultants are specialised in selecting the right financial provider for you, which they will do as part of helping you expand online. This service is absolutely FREE.
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