Choosing a payment method
How can you accept payment from the users of your website?
There are different payment methods for online transactions. This page has a brief summary of the following payment types:
- Credit card
- Debit card
- Direct deposit and direct debit
- Online payment services
- Electronic bill payment services
- Cheques and money orders
|Credit card||The credit card is one of the most popular online payment methods because of its ease and convenience. However, it is important to protect the credit card details of your customers or donors. A number of new services available from some credit card providers are designed to make online credit card purchasing more secure. These include MasterCard SecureCode and Verified by Visa. If you accept credit card payments you can expect to get a message confirming or declining the transaction almost immediately. The payment will usually settle into your account within 48 hours.
Different credit card brands have different transaction costs associated with them. Consider these when you choose which credit cards you accept.
You may need a merchant account to accept credit card payments. This is a specific kind of bank account for receiving payments from credit and debit cards. If you have a merchant account with a terminal or imprinter to take card payments in the physical world, ask your bank or credit union if you are able to use the same merchant account for online transactions. Financial institutions usually charge merchant accounts fees for set up, transactions and account keeping.
As some people may not want to provide their credit card details online, you might also like to consider offering an alternative payment method.
|Debit card||Debit cards use credit card payment processing technology to access funds directly from the card holder’s transaction account. This is generally used as an alternative to EFTPOS or ATM cards, which cannot be used online because they require a PIN. If you have a credit card processing facility on your website you can usually accept debit cards without making any changes.|
|Direct deposit and direct debit||Direct deposit occurs when a payer transfers money directly from their own account to another bank account. In contrast, direct debit is an automated electronic funds transfer from a payer’s account that occurs on a regular basis (such as a monthly donation). If you offer a direct deposit payment option you need to make your bank or credit union account details available to the payer. This is usually done on request rather than publishing your bank details on your website. The minimum are generally the account name, the BSB and account numbers and the name of your bank or credit union. When accepting direct deposit payments, you should instruct all payers to include a clear way for you to identify a transaction so you know when the payment is received. This is often done by providing an invoice number for the payer to include in the transaction description.
Direct deposit and direct debit payments usually take 24 hours to clear into your account, but can sometimes take longer.
|Online payment services||PayPal, Paymate and eWAY are examples of online payment service providers that act as intermediaries between merchants and consumers. These online payment providers allow your customers or donors to pay by credit card or electronic transfer without you having access to their credit card or bank account details. Once customers have transferred funds into your account with the online payment provider, you can transfer the funds into your bank account.|
|Electronic bill payment services||Electronic bill payment is a common way for large organisations with many customers to allow bill payments over the internet. It can be useful when your organisation is invoicing many people regular amounts (e.g. monthly bills), but may not suit one-time purchases or donations without a prior invoice. BPay and Australia Post Bill Pay are two of the largest providers of electronic bill payment services in Australia.|
|Cheques and money orders||Cheques and money orders have become increasingly rare as payment methods for online transactions because of the time taken to send, receive and process the payment. As for direct deposit payments, you should ensure all payers include some reference with cheques or money orders to help you identify the transaction. Exercise the same caution you would use when accepting cheques in offline transactions.|
- Don't deliver goods or services until you have confirmation that you have received valid payment, whatever payment method you are using.
- In selecting the payment method(s) to offer your customers or donors, pay careful attention to the cost and terms on which these payment services are offered.
- If you choose to use credit cards as your payment method, you may need to use a payment gateway service.
- Remember that payment details provided by your customers or donors are extremely sensitive pieces of information. When dealing with this information, you will need to pay attention to privacy and security issues.
How much can I expect a merchant account to cost?
There are various fees and costs associated with merchant accounts. These may include set up costs, annual and/or monthly account keeping fees, transaction fees (generally a percentage of the transaction total) and exit fees. It is a good idea to do your research as these costs will vary between different banks and credit unions’ merchant accounts. You can find various merchant account comparison tables, such as this one, on the internet.