Ecommerce payment systems

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Ecommerce payment systems

Millions of consumers use the Internet for banking, shopping and so forth on an everyday basis and are reliant for their security on ecommerce payment systems. An e-commerce payment system is a secure online payment system, operated by a High Street bank or a specialist company and often, although not always, integrated into the checkout process of a site. The aim of an ecommerce payment system is to provide transactions that are not only secure – in real and perceived, terms – but fast and at minimal cost to the consumer. There are several different methods of achieving this aim and costs vary, so it is worthwhile to examine some of the options available.

Bank and Credit Card Systems

Many large online businesses use the payment systems offered by major credit card operators, such as Visa and MasterCard. Cardholders create and register a password with their bank and use that password to authenticate each online transaction that they perform. If you have a merchant account with a bank, it may also be possible to collect credit card details online, but to process transactions manually – as “customer not present” – depending on the terms and conditions of your agreement.

PROTX (now Sage Pay)

Another alternative is to integrate your online checkout process with an e-commerce payment system provided by a bank, for which you will be required to pay a monthly fee, plus a percentage of each transaction. Protx which has just been rebranded as Sage Pay) for example, provides a payment gateway which integrates with bank systems for a fixed monthly charge, provided that you have a merchant account with one of its bank partners. Sage Pay “Go” costs £20 for up to 1000 transactions per quarter and from 10p per transaction if you regularly processing over 1000 transactions per month.


If you want to accept online payments directly through your own website, you will need what is known as an Internet merchant account. This can be handled indirectly, through a service such as the SecureTrading Merchant Account Service. This can also arrange merchant accounts for mail order or telephone ordering if need be – or directly at a bank. Charges for merchant accounts vary from bank to bank, and according to the type and age of your business, together with other trading factors such as turnover.


If you feel that you do not need, or do not want a merchant account with a bank, PayPal may provide a simpler option. You can create a PayPal account very quickly, and there are no set up or cancellation fees. Importantly, you are not bound by a minimum number or value of transactions each month. You can simply cut and paste the HTML code supplied by PayPal for the creation of a payment button into your online checkout for single item transactions. Alternatively you can choose one of the many shopping carts already integrated with PayPal for multiple items. Transaction fees range from 1.4% to 3.4%.

Google Checkout

Other ecommerce systems that you wish to consider include Google Checkout, which allows online shoppers to make purchases from anywhere on the Internet, but provides tracking and delivery information in a single location. Merchant fees range from 1.4%   £0.20 through to 3.4%   £0.20 per transaction depending on sales volumes, with additional costs for international transactions.


WorldPay is backed by the Royal Bank of Scotland, the fifth biggest bank in the world. It – which allows secure payment not only by credit, or debit, card, but by what the firm claims is the widest range of payment means currently available.
All of the major ecommerce payment systems providers are rated by the PCI Security Standards Council which is a global forum concerned with security standards for account data protection. The Council has a stringent set of Data Security Standards (PCI DSS) to which payment providers are encouraged to adhere.

UK Ecommerce Market Size

Ecommerce is an abbreviation of electronic commerce and embraces the buying and selling of products or services through electronic systems. The 1970’s and 1980’s saw explosive growth in the popularity of credit card, automated bank cash machines and telephone banking, but this pales into insignificance when contrasted with the growth of online ecommerce in recent times.

Online Growth in Context

In light of the current economic climate, many people wrongly assumed that the online sector would experience a commensurate slow-down. Whilst there is little doubt that the internet has had a significant effect over the last 18 months, the effect has not been quite as many had predicted. In fact, increased online competition, competitive offers, easy access to international markets and twenty four hour online shopping have all played a large part in the slow down of high street traffic. Many argue that the demise of some traditional “bricks and mortar” retailers has not in fact occurred as a pure consequence of changes in the wider economy but has simply been an inevitable result of the growth in ecommerce, with the wider economic changes simply hastening the inevitable.

Headline Statistics

Whatever your views on the subject, the figures are really quite staggering. In April 2000, estimated online expenditure in the UK was £87 million. By December of 2005, the figure had increased significantly to some £2.26 billion. It is currently estimated that by the end of 2009, the UK e-commerce market will hit £68.4 billion. On a larger scale, European business-to-consumer (B2C) e-commerce sales totalled 106 billion Euros in 2006 and are expected to reach some 323 billion Euros in 2011.

The Land Grab

Whilst few businesses are entirely immune from the effects of an economic slow-down, the figures above demonstrate the scale of the opportunity. With some very early indications that the slow-down may be “bottoming out”, now is the ideal time for businesses large and small to create or indeed significantly revamp their online presence. Pressure on marketing budgets has reduced expenditure on paid online advertising, in many cases diverting resources to the “land grab” that is currently occurring in unpaid or natural search. Many firms are diverting resources to their search engine optimisation (SEO) efforts in seeking long-term presence in the search engines, the return on investment figures for which can be literally incredible. Even if you have an existing web presence, it may fall a long way short of the requirements needed to thrive in the intense heat of SEO in 2009.
Some 65% of consumers are now believed to browse for product or retailer reputation before making a purchase, retailers will certainly need to ensure that they offer their customers the same level of service, if not greater, than that of a comparable in-store experience. Affiliate marketing, online reviews, blogs and social networking all make it particularly easy for the reputation of a retailer, good or bad, to be spread quickly on an international level. Wise firms are taking full advantage of social media optimisation (SMO) techniques to build brand reputation and awareness.

Further Thoughts

Those starting out in ecommerce are also at an advantage in that the size and generally the location of the company is irrelevant to the consumer. If goods and services can be delivered to the agreed time scales, price and quality, consumer demand is there for the taking.
The thought of branching out into ecommerce may seem daunting for smaller businesses, particularly those that don’t have a track record in computer technology. One of the biggest myths is that a website will prove too costly to set up and maintain. A wise web design partner can steer you through the minefield and ensure that you achieve an effective yet cost-controlled online presence. Ecommerce allows your business to potentially operate 24 hours a day, 7 days a week with margins unparalleled in traditional channels.
In today’s climate it is not so much the case that businesses cannot afford to branch into ecommerce trading, but rather, they cannot afford not to.