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How to accept payments online?

We’re living in a time when geography is no barrier to buying what we want. So being able to take payments online is an absolute must for businesses and there has never been so much choice in how to do it!

But setting up an online system to process purchases can be a minefield with so many options available.

So which is best for your business and how easy is it to put in place?

The options

The main online payment methods can be divided into three rough categories:

Direct Debit;

– debit and credit card payments;

– outsourcing the whole process to a ‘middle man’.

Each has its own benefits, costs and requirements so you need to consider carefully what is realistic for both the size and scope of your needs.

Direct Debit

Direct Debit is usually one of the cheapest ways to take payments online. However this won’t be suitable if you need to take instant payments, for example through an online shop.

But for many services, subscriptions and for regular purchases, taking payments from your customers by Direct Debit offers many benefits.

You can read more about how Direct Debit works in our guide here.

You can set up a Direct Debit payment system yourself by applying for and setting up a merchant account – known as a Service User Number (SUN). To set up a SUN, you may wish to talk to your bank however most businesses will be rejected on the grounds that they have low turnover or other reasons.

Alternatively, you can use a third party to manage the process – either a Direct Debit ‘bureau’ or by purchasing software. A bureau will take Direct Debit payments on your behalf either using your SUN or their own SUN.

There are lots of different types of software that manage Direct Debit payments, and many will integrate with your other financial systems, which is a clear benefit. However, this can be a more expensive option as the functionality increases, as you would expect.

Card payments

Payment by debit and credit cards is one of the most popular methods of making purchases online. The nature of e-commerce means taking instant payments in this way is a must for some businesses and customers.

Similarly to Direct Debit, you can either choose to set up a merchant account yourself to accept card payments, or you can use a third party to process payments on your behalf.

To do it yourself, banks or other financial institutions will set up a merchant account for you which will hold the money from card payments temporarily. You can then move the money to your business account.

Alternatively, you can use a third party ‘payment gateway’ which will take the card details, then notify you if the payment is approved by the relevant bank before submitting the request for payment.

Outsourcing the whole process

Taking payments online can seem daunting, especially ensuring that you can manage the process securely and in-line with the necessary rules around data and financial protection.

An attractive option could be to outsource the whole process to a payment service provider or processor. They will manage the process between your business, your bank and the customer’s bank. With London & Zurich you can have the flexibility of having both online and direct debit and card payments services.

The type of payments taken will depend on what the company offers but could include card payments, digital ‘wallet’ payments, recurring payments, subscriptions and Bacs payments.

You don’t normally need to set up your own merchant account for this and because you won’t have access to financial details, you don’t need to worry about compliance issues as this will be managed on your behalf.

Of course, because of the convenience, this is likely to be a more expensive way of taking payments for your business, but is appealing to those without the time or expertise to manage the process themselves.

If you want to use any kind of third party to take payments, always consider the set-up cost but also the charges for individual transactions, to make sure you select the most cost-effective option in the long-term.

Speak to our team on 0121 234 7999 to see how we can help your online payments today.

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