Choosing an Online Payment Processor

Discussion in 'Ecommerce Forum' started by Ozzy, Jul 17, 2004.

Thread Status:
Not open for further replies.
  1. Ozzy

    Ozzy UKBF Founder Full Member - Verified Business

    3,405 157
    Getting started in E-Commerce - Choosing an Online Payment Processor

    Despite the claims that the UK is a great place to set up shop, finding the right service for taking credit card payments online can be a stressful journey! In the second of our Getting Started with E-Commerce series, we guide you through some of the minefield that is online payment processing.

    So, what do you need to take debit and credit cards online?

    1) A business bank account
    2) A merchant account to process credit card payments
    3) An online payment processor to process card transactions automatically online

    These can all be with separate institutions, or at your business bank.

    Business Bank Account:

    If you don't already have a business bank account, get this sorted first. You can do little without it! Have a look at for a comparison of accounts.

    Merchant Accounts:

    A Merchant Account is an addition to your business bank account that allows you to accept credit and debit card payments. If you already have a merchant account from your bank, check with them before processing internet transactions as additional permission is usually required for this, even if you already do process Cardholder Not Present transactions. If your bank is unwilling to set up a merchant account for you, have a look at the sites mentioned below for information on a payment processor combined with a merchant account. Be warned however, that it is usually more expensive to go down this route.

    Choosing a Payment Processor:

    An online payment processor automatically processes debit and credit card orders from your site, so you don't need to handle the card details at all. There are a number of areas that you need to consider when choosing an online payment processor:

    1) Setup fees: These can vary from free to £250+
    2) Annual Fees: Again this may be free or can be as high as £160 (for example WorldDirect from Worldpay). These may be replaced with a monthly fee in some cases.
    3) Merchant transaction fees: These are the fees your merchant bank charges for the transactions. Can be a fixed rate or a % of the transaction, or both.
    4) Online processing fees: This is charged by the company processing the transactions online for you. Can be a fixed rate per transaction or a % of the transaction.
    5) Bank fees: A generic fee (for want of a better description!) that may be charged for transferring funds to your bank account.

    And check the lead time for receiving the cash in your bank!

    1) Worldpay's WorldDirect service has a lead time of 4 weeks + (though this can be negotiated after a period of trading)
    2) Others may be daily or weekly if you have a merchant account

    If you have a merchant account, then one of the following online payment processors can be used:

    If you don't have a merchant account, then try the following (they include merchant facilities): (WorldDirect service) (KwikOnline service)

    There are also alternative options such as:

    Step by step example using Worldpay's World Direct service:

    1) You need a company bank account if you are trading as a company, so that's your first step. Best place to start is the bank where you have your personal account as you will have a history with them.

    2) Then set up your website and the shopping basket you have chosen. If you don't have a merchant account, and don't think your bank will give you one, then you will probably go for World Direct from Worldpay so get a shopping cart that works with that.

    3) Once the cart is set up, order your Worldpay account. You need a bank account and a website in order to apply for Worldpay.

    4) Once Worldpay has approved your account, link it to the cart (this varies with each system so you will have to read the cart's manual for that)

    5) Test it in test mode and then set it live. It's worthwhile testing it in live mode as well with a low-priced product and then refunding the money to your account.

    Written by Managed Web -
    Posted: Jul 17, 2004 By: Ozzy Member since: Feb 9, 2003
  2. kyber

    kyber UKBF Newcomer Free Member

    836 28
    I would like to add Pay Systems to the list. We have used them for over a year and have been very happy indeed. Yiu can use them with or w/o a merchant account.

    Charges vary so shop around.

    Posted: Jul 21, 2004 By: kyber Member since: Mar 3, 2004
  3. momtrepreneur

    momtrepreneur UKBF Newcomer Free Member

    25 0

    There are so may merchant services out there.

    Nochex and Paypal - previously you have to be a member to purchase something and now thats change but does this mean that they don't need to be a member to purchase right there and then but once the order is processed you would still need to apply to be a member prior to the shop despatching your goods.

    They're cheaper version of Worldpay but then they give out the small business operating from back bedroon kind of image or am I mistaken? Yes there is nothing wrong, I suppose it depend on how you want your business to perceived.

    Paysystem is ok but they don't allow you to refund partially, just full or nothing at all. Check their charges for sending you the funds. If you're selling multiple items of different types, the shopping cart does not itemised these.

    Posted: Jul 21, 2004 By: momtrepreneur Member since: Oct 24, 2003
  4. SillyJokes

    SillyJokes UKBF Newcomer Free Member

    4,504 598
    We use WorldPay which seemed expensive at first but was convenient as we didn't need a merchant account.

    Now we have negotiated much lower rates because they know our business is working.

    Lower rates are there for the asking once you have been up and running for a while.
    Posted: Jul 26, 2004 By: SillyJokes Member since: Jul 26, 2004
  5. Sibs

    Sibs UKBF Newcomer Free Member

    28 0
    Also, if you have a merchant account with your bank (for online payments) you probably won't need a separate payment processor.

    You don't also need to use an off-the-shelf shopping cart as your web designer should be able to write a tailored one for you.

    Posted: Oct 26, 2004 By: Sibs Member since: May 24, 2004
  6. owen@westwindmoves

    [email protected] UKBF Newcomer Free Member

    20 1
    I think offering all 3 as an option to pay is the best offer.

    Worldpay - probably give out the best image.

    Nochex - I've actually found this to be an excellent system and if you are a small business looking for a processor without having to pay startup costs (like Worldpay) or cannot wait 4 weeks for your cash (like Worldpay) then this has to be a good alternative.

    Paypal - Used to get a lot of bad press. Things are changing with Paypal. They are now owned by E-Bay, you no longer need a Paypal account to buy on a site using Paypal as a gateway. Many people regard Paypal as looking amateurish - however, you do not need to use the buttons provided by Paypal - design your own instead and simply have a Paypal button as an option at the final checkout.
    There are 43 million account holders, so to ignore Paypal in case it "conveys the wrong image" might not be such a good idea.

    My advice is to develop your own shopping cart (or use a third party shopping cart) and then offer the user the choice of which payment gateway to use. Strangely enough, we used to be a Worldpay affiliate partner but most people paying on our site used Paypal when given the choice out of the two (although I know other people who found the reverse to be the case).
    Posted: Oct 26, 2004 By: [email protected] Member since: Oct 17, 2004
  7. Thais

    Thais UKBF Newcomer Free Member

    328 0
    I've just discovered this thread, and am glad that I have! :D

    So far, as I'm a small business for a pretty specialised market, I've used NatWest Fastpay, but I don't recommend them at all! I have continual problems with them & can only contact them online. The latest hassle was their refusal of a client's payment...because it was over £25! On their site, they tell you £50 is the payment limit but surprise! all of a sudden it seems the limit is now £25!! They didn't bother to change this info on the website, or let clients know :evil: They did give me an apology but what good is that?? I had to call the client, calm her down & persuade her to send me a cheque! The sign-up process is also long & complicated, so no wonder the majority of my customers prefer to send a cheque.

    So now I'm looking into Nochex & Paypal, both of which seem to offer a good cheap service. From customers' feedback, it seems so many have Paypal accounts already - I suspect they are all E-bay fans! :wink: But Nochex is fairly well known too.

    I had a look at the Pay Systems site, but they don't seem to want to tell us about their charges (or maybe I just couldn't find this - it could be me). At least Nochex & Paypal are quite clear on this.

    Onwards & upwards....

    Posted: Nov 17, 2004 By: Thais Member since: Aug 29, 2003
  8. kyber

    kyber UKBF Newcomer Free Member

    836 28
    I should have mentioned, we have stopped using Pay Systems. They were forced to switch to requiring full merchant accounts which we did not want.

    As most of our (LAM Design) customers are after personal service they pay in cash or by cheque when they visit, we have decided to just use PayPal and Nochex from now on especially given how much simpler PayPay payments are for newcomers these days. We find features such as sending PayPal invoices very useful.

    I don't think that the majority of people on the net have a big problem with PayPal these days but accept that for higher volume transactional sites, it is important to have a number of payment alternatives including a "proper" card processor.

    Posted: Nov 17, 2004 By: kyber Member since: Mar 3, 2004
  9. Guest

    0 0
    Most purchasers don't have a problem with Paypal but, as a vendor, I wouldn't go near them. They have the ability to freeze your account for the most trivial reasons with any money you still have in it. If it's your only payment system your business immediately grinds to a halt. If you've carelessly left a lot of money in the account, you could end up out of business. And Paypal definitely gives that "Mom & Pop in the garden shed" business image.

    Ebay itself has a bad reputation for not dealing adequately with fraud - and there's plenty.

    In contrast, WorldPay seems to have gotten it about right. Maybe that's because they can afford to. They cost more but it's probably worth it.
    Posted: Dec 25, 2004 By: Member since: Jan 1, 1970
  10. StartUp

    StartUp UKBF Newcomer Free Member

    154 0
    Interesting discussion, I have always used worldpay, and still do, but since adding Paypal as an alternative, quite a few people have gone for this option rather than paying through Worldpay.
    I suppose it's because they don't have to add their credit card details again if they already have an account?

    I have also found that quite a number of what I would call "big players" on the internet only use Paypal.

    Posted: Dec 30, 2004 By: StartUp Member since: Nov 20, 2003
  11. UKBF Newcomer Free Member

    18 0
    It is worth mentioning that I stopped using WorldPay because of their inability to detect fraudulent transactions. They may seem hype, but the amount of money that was drawn from my merchant account with them due to chargebacks is something that all of you need to be aware of.

    We registered for the service and guess what, even though you don't even need a business bank account, they have detected most fraudulent transactions.

    I ended up paying more than 200 quid to them in less than 4 months. This is not good at all.

    So I decided to drop the hype worldpay account and get one at 2co. Much happier customer with them!
    Posted: Dec 31, 2004 By: Member since: Dec 16, 2004
  12. Guest

    0 0
    Hmm, it doesn't exactly inspire me with confidence in them to find two typos in just one sentence:

    (This appears in a pop-up when the customer wants to get more info about credit transfer).
    Posted: Jan 1, 2005 By: Member since: Jan 1, 1970
  13. WSC-Will

    WSC-Will UKBF Newcomer Free Member

    13 0
    For some additional advice on choosing an online payment processor I'd suggest looking at, a website backed by the DTI and Scottish Enterprise.
    Posted: Apr 3, 2005 By: WSC-Will Member since: Mar 17, 2005
  14. sportingmemories

    sportingmemories UKBF Newcomer Free Member

    6 1
    Thanks for the good advice, we ( have gone with the PayPal Shopping Basket option to start with, with a view to move to Protx ( in the coming weeks. PayPal almost has it all, fantastic transaction fee`s, easy for the customer to use etc.

    It does have its drawbacks though, which I will highlight here. They don`t accept quantities, for example our company generally only has one quantity of each item so when that is purchased it needs to be displayed as sold, this isn`t possible with PayPal. We got around that problem with some nifty. asp scripting on our end of the site. When the checkout procedure reaches our successful payment page it is then displayed as sold on our website.

    Also the £500 spending limit on unverified accounts can prove a sticking point if you`re products are of a high value. Due to those two quite major problems we will be moving to Protx ASAP, which still provides fantastic transaction fees without any of the drawbacks.

    Has anyone else had similar problems with PayPal?
    Posted: May 2, 2005 By: sportingmemories Member since: May 2, 2005
  15. IMEX Sourcing Services

    IMEX Sourcing Services UKBF Regular Full Member

    487 31
    I am not sure if its directly relevant, although I would like to know, isnt paypal the easiest to set-up? Also do you need to have a business bank account to actually set-up paypal (I guess you dont) ?
    Posted: May 24, 2005 By: IMEX Sourcing Services Member since: Dec 3, 2004
  16. GamesMission

    GamesMission UKBF Newcomer Free Member

    8 0
    There are also some UK based "All in one" bureau accounts that allow you to use their merchant account

    These are:

    Other options include (not tested)

    I urge people to check these out.

    But all in all the best option is still getting a IMA number (internet merchant account number) from your bank and then use a 3rd party psp such as protx, datacash etc

    You could also try, and

    I hope this helps!!

    Posted: May 25, 2005 By: GamesMission Member since: Apr 23, 2005
  17. jasonj

    jasonj UKBF Newcomer Free Member

    15 1
    I have recently advised two of my clients who we are designing ecommerce websites for to use paypal to take the payments. Any small business wanting to get into ecommerce is being charged through the roof with £250 set up costs and £25 per month costs. If you start turning over 4-5k per month then worldpay and other authorisers are worth considering. If your a small business testing the water then paypal is the way to go.

    We can help companies who want to get into ecommerce develop a professional looking site at a reasonable cost.
    Posted: Jul 19, 2005 By: jasonj Member since: Mar 9, 2005
  18. simon-at-shopfitter

    simon-at-shopfitter UKBF Newcomer Free Member

    16 7
    Interesting thread and it highlights that there many differing views about online card processing.

    We at NOCHEX are keen to work with internet vendors to provide merchant accounts that are equivalent to Worldpay's World Direct account (i.e. combined merchant account and payment gateway).

    The good news is that we're improving our payment pages and functionality all the time to provide a professional looking service.

    Something that is worth mentioning is that our rates are lower than PayPal, our anti-fraud activities are robust and as standard we provide chargeback protection (subject to certain limitations that shouldn't affect most small businesses) on our basic seller account.

    We also do listen to our users and respond to customer support queries as quickly as we can, which is an advantage for UK based small businesses who don't have dedicated IT staff.

    If anyone has any comments or queries then please feel free to contact us, either here directly to me or visit our contact page at


    Communications Manager
    Posted: Jul 28, 2005 By: simon-at-shopfitter Member since: Jul 28, 2005
  19. kyber

    kyber UKBF Newcomer Free Member

    836 28

    Do tell me more about the "merchant account" offering. There is no information on your website, just a get in touch request.

    Posted: Jul 29, 2005 By: kyber Member since: Mar 3, 2004
  20. simon-at-shopfitter

    simon-at-shopfitter UKBF Newcomer Free Member

    16 7
    Hi Stuart,

    The reason the website only says 'get in touch' is because we tailor the service to suit your needs rather than providing a prescribed level of features.

    We will be rationalising our product offer soon, however, in the meantime I can tell you that we can be flexible on a number of account parameters depending on your status and transaction levels.

    Sorry this is a bit vague but it really is determined by looking at a number of variables and requirements on an individual basis.

    I hope thats of some help.


    Communications Manager
    Posted: Jul 30, 2005 By: simon-at-shopfitter Member since: Jul 28, 2005
Thread Status:
Not open for further replies.