Online Payment Systems - the Trust Factor

Convincing your customers to part with their hard earned cash online is the greatest challenge that a e-trader will face. Even if you have managed to put in place every other element of your e-commerce solution this is the biggest hurdle to overcome.
It all comes down to one thing........trust.

If your customer does not trust your online presence then they will never give you their credit card details, send you a cheque or transfer funds from their internet account.
This is the area where most online shops fail. Do not fall into the same trap. Your e-commerce solution must contain the following elements.

a secure area for customer details (Secure Socket Layers with at least 40 bit and ideally 128 bit encryption)
if using an email order form, encrypted email
prominently displayed terms and conditions and a privacy statement (Data Protection Act)
if using an online database, server and database security
a widely recognised certificate provider (use their logo on your home page and the order page - prominently displayed.)
a clearly stated refund policy (in terms and conditions)
your site must have a professional look and feel to it, again a trust issue
your name, address, phone number, fax and email contact details. (A legal requirement)

We also have a UK Online for Business fact sheet available to download entitled 'Accepting Payments Online'

Online Merchant Accounts
This is an upgrade from an ordinary credit card merchant account and is normally obtained by approaching your existing high street bank. The bank will charge you their usual percentage transaction charge, 2 - 3% and will also be tied in with a third party online transactor. This is the company that supplies the security for the secure transaction and processes the payment online in real time. They also will levy a fee for this, again anywhere between 2-3%.
It is worth shopping around to see who is offering the lowest percentages for both charge levels.

Pros - A household brand name, accept a number of credit cards, very familiar to the customer, very secure, no credit card info held by you. No need to get involved in payment processing yourself therefore lower overheads (staff time)

Cons - Cost. May require a bond. Cash flow, some providers take 28 days to transfer the money to your account. (Ask this question)

Internet Trading Accounts
This is a service usually offered by the third party payment providers mentioned above. If you comply with a few criteria you are almost certian to be awarded an account. Cost is similar to the above but can be more expensive in some cases, dependant on level of transactions.
Read their terms and conditions carefully, they have made sure that they are not exposed to risk in any fashion so make sure you understand your liabilities in advance.
Many of these providers are well known on the Internet and lend you credability by association. (Trust Factor)

Pros- Much the same as above. No bond

Cons- Set up charge up to £300-£500. A great deal harder to deal with if you have problems, some only offer email service links. Cash flow implications as above. Usually more expensive than a straight forwrd merchant account in some cases.

Examples

Other Resource Sites

Electronic Payments - DTI's 'Best Practice' web site for e-commerce (See link in right hand side panel)