Organizing webshop payments

When analyzing and designing your webshop, there is one aspect you should not overlook: The payment methods you will offer.

• Will it be credit card, PC-banking (which banks ?), PayPal, SMS,...
• For which banks of which countries does this need to work ?
• What do you need to have ? Just a bank account ?
• If you have already a banksys terminal in your shop, is that sufficient ?
• What are the costs ?

So let’s tackle following questions:

Who and What do I need ?

Your customer pays for the order at the webshop, and you want to receive the money...

To achieve this, you need 3 components:

1. Your website on which you want to integrate in a seamless way a payment module
2. A third party offering this payment module to integrate in your website: the payment service. This is often called the gateway
3. A provider who will process the financial transactions. This will be a bank or acquirer

Compare this with the brick world: You visit a restaurant. You want to pay, and the waiter comes with a mobile banksys card reader. You can choose to pay with Proton, Visa, Mastercard, Cash, Bancontact. The card reader will connect to a backend application in a datacenter of Atos World (payment service provider for Belgium). The payment service will query the customers bank to validate funds are available and instruct the bank/acquirer of the restaurant to transfer the money amount.

A webshop is similar:

1. You need to integrate some sort of “card reader” solution on your website. That’s handled by the payment service. They will give you a piece of software to integrate in your webshop which offers this technology. Their role is also to make the connection with the bank/acquirer.
    
2. In order to let the money to be transferred from the customer account to your account, you need also one or more contracts with a bank/acquirer. They will actually perform the transaction.

What is an acquirer ?

An acquirer is a financial institution who grants you as web-store the permission to accept payments with a specific card or home-banking.

The acquirer will ask the money from the bank or card company of the buyer, and will assure that the money gets onto your account. So in most cases a verification has been done to validate the buyer has enough funds to actually let this payment go trough. There are banks or  spin off companies of banks offering this acquirer service.

The advantage to the seller is that using an acquirer service lets you monitor the outcome of the transaction, in many cases in real-time.

Compare this with letting the customer “stating” to you he paid without actually any proof for the seller. That real-time proof from the Acquirer is the main differentiator between letting the customer pay independently from your website or launching the home-banking from your website: the last one will give you the solid proof of payment.

So, you can ship now...

Disadvantage of using an acquirer is probably only the fact it will cost you some money. 3% transaction fee is fairly typical. But being sure you are paid now is worth this 3%...

To summarize:

Grants permission to accept payments

• Credit card acceptance (not blacklisted, not exceeding monthly allowance,...)
• Other cards (e.g. maestro)
• Home banking of specific banks

Advantage seller:

• Most cases real-time confirmation the financial transaction pulled though.
• It will still take a couple of days before the money is on your account, but you have reasonable confirmation now that you are paid
• So you can send your goods

Disadvantage seller:

• Acquirer will ask a transaction fee (e.g. 3%)
• You will not have this cost is your customer just transfers the money to your bank account without the acquirer intervention.

Payment service (Gateway)

If you are only working with one bank or acquirer, you might get away without using a payment service. Many will offer an applet you can embed in your website. Soon though, you might realize you want to offer yet another payment method, not being offered by your first acquirer.

To remove the complexity of offering the payment methods of multiple card companies and banks (e.g. their home-banking), you should be using a payment service (or gateway) which has solved all the integration work to use a great variety of banks and acquirers.

If now, you want to add an additional payment method, you only have to register this with the payment service and have a contract with that acquirer. You will not have to change any programming work on your website. This would not have been the case if you where contacting the acquirers and banks directly without using a payment service.

Some service companies who are acquirer are also payment service provider. The first is more difficult, as you need a bank license to operate as acquirer.

Make sure you select a Payment Service provider who can certify he is capable of offering a maximum of payment methods.
 

To summarize, a payment service:

• Integrates multiple banks / acquirers seamlessly
• You only have to add the app of the payment service on your webshop
• No extra programming required for more  payment methods (if you selected the right payment service)

Contract summary

After this overview, let's identify the parties we need to have a service contract with:

• Have a contract with an/multiple acquirer(s) or bank(s) to cover every payment method needed
• Have a contract with a suitable payment service provider (supporting those banks and acquirers)
• Integrate the module offered by the payment service provider into your website.

Some players

Some payment service providers in the BeNeLux market:

https://www.paypal.com/be/webapps/mpp/home

https://www.ideal.nl/

https://payment-services.ingenico.com/int/en  (was Ogone)

https://www.sofort.com