How to accept payments online: A guide for businesses


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  1. Introduction
  2. Types of online payment methods
  3. Components of online payment processing
  4. Benefits of accepting online payments
  5. How to accept online payments
    1. 1. Choose a payment processor
    2. 2. Set up a merchant account
    3. 3. Integrate a payment gateway
    4. 4. Test and launch
    5. 5. Optimise and monitor
  6. How to choose an online payment provider

While in-person payments continue to evolve, including newer options such as tap to pay and other contactless payment methods, many businesses operate entirely online. Even legacy brands that have accepted money in person for decades are now accepting online payments, too.

In 2021, retail e-commerce sales totalled approximately US$5.2 trillion globally, a number that's expected to grow by 56% to US$8.1 trillion by 2026. It’s important for businesses to have a robust online payment-processing system in place.

Below we’ll cover the benefits of accepting online payments, the different types of payment methods available, how to choose an online payment provider and how to set up online payment processing. Whether you’re a small business owner or a decision-maker at a larger company, this guide will provide the information you need to accept online payments quickly, securely and efficiently, and to scale these processes as your business grows.

What’s in this article?

  • Types of online payment methods
  • Components of online payment processing
  • Benefits of accepting online payments
  • How to accept online payments
  • How to choose an online payment provider

Types of online payment methods

Businesses can choose from a wide variety of online payment methods, each with its own benefits and drawbacks. It’s important to consider your target audience’s preferences, the functionality of your primary sales channels and the cost and security implications of each method. You’ll probably decide to offer more than one or two payment methods, since online customers prefer to have a variety of options.

Here are some of the most common types of online payment methods:

  • Credit and debit cards
    Credit and debit card payments accounted for 34% of global online transactions in 2021. They offer convenience, speed and security, and they are accepted by most online businesses.

  • Digital wallets
    Digital wallets, also known as e-wallets, are online accounts that store and manage payment information. Popular digital wallets include PayPal, Apple Pay and Google Wallet. In 2021, digital wallets overtook credit and debit cards as the most popular e-commerce payment method globally, accounting for nearly half of all transactions.

  • Bank transfers
    Bank transfers move funds directly from customer bank accounts to a business’s bank account. This method can be slower and less convenient than other payment methods but it is often preferred by customers who do not have a credit or debit card, or who want to avoid credit card fees.

  • Cryptocurrencies
    While cryptocurrencies are still relatively new, businesses that accept cryptocurrency payments could have a competitive edge and attract customers who prefer this payment method. According to a Statista report, the global value of cryptocurrency customer payments is expected to reach $1.4 trillion by 2024. This is a significant increase from an estimated $590 billion in 2020 but still represents only a small fraction of the overall online payments market, as cryptocurrency payments have not yet been widely adopted by customers.

  • Mobile payments
    Customers can pay for goods and services using their mobile devices, usually through a mobile app or digital wallet. Mobile payments are fast, convenient and increasingly popular as more people use smartphones for online shopping.

Components of online payment processing

Online payment processing involves several components that work together to securely process and authorise transactions. These components include:

  • Payment gateway
    A payment gateway is a secure online portal that connects the business's website or mobile app to the payment processor. It captures and encrypts the customer's payment information and sends it to the payment processor for authorisation.

  • Payment processor
    The payment processor verifies a customer's payment information and authorises the transaction. It communicates with the payment gateway and the customer's bank or card issuer to ensure that the transaction is valid and authorised.

  • Merchant account
    A merchant account is a specific bank account that is required for businesses that want to accept and process credit and debit card payments. Merchant accounts are exclusively used to hold transaction funds. These funds are then deposited into the business’s primary bank account where the business can access and use them. The payment processor or acquiring bank usually sets up merchant accounts.

  • Acquiring bank
    The acquiring bank is the bank that delivers the transaction funds to the business's bank account, and it often provides the merchant account. It's responsible for managing the financial aspects of the transaction, including fees and chargebacks.

  • Security measures
    Online payment processing systems include several security measures to protect both the business and the customer from fraud and unauthorised transactions. These measures may include SSL encryption, tokenisation and two-factor authentication, among others.

Benefits of accepting online payments

For many companies, accepting online payments is necessary to stay competitive and provide a positive customer experience. By offering convenient and secure payment options, businesses can reach new markets, attract new customers, increase revenue and streamline their operations.

Accepting online payments can provide numerous benefits for businesses, including:

  • Improved convenience for customers
    By accepting online payments, businesses can offer a more convenient way to pay for goods and services – allowing customers to make payments from anywhere, at any time, without having to visit a physical retail outlet or send a cheque through the post. This flexible payment functionality reduces friction in the customer experience, which benefits businesses by boosting revenue, improving customer satisfaction, driving loyalty and increasing customer lifetime value.

  • Increased sales and revenue
    Accepting online payments can help businesses expand their customer base, grow into new markets and increase sales by removing barriers to purchasing. With more payment options available, customers are more likely to complete their transactions, resulting in higher conversion rates and revenue for the business.

  • Reduced risk of fraud and chargebacks
    Online payment processing systems are designed with security features that reduce the risk of fraud and chargebacks. By using a secure payment gateway and payment processor, businesses can protect themselves and their customers from unauthorised transactions and fraudulent activities. For example, Stripe Radar employs machine learning that’s trained using data from millions of global companies to detect and block fraud for both in-person and online payments.

  • Streamlined accounting and reporting processes
    Online payment processing can be a powerful time saver for businesses, with simplified accounting and reporting processes and automated transaction records and reports. Online payment processing providers like Stripe not only reduce the internal workload of businesses, but also gather, synthesise and report on payment and customer metrics in ways that are easy to act upon.

How to accept online payments

Accepting online payments may seem daunting for businesses that are new to e-commerce or digital payments but, with the right tools and strategies, it can be surprisingly simple.

Here are the steps businesses can take to start accepting online payments:

1. Choose a payment processor

The first step is to choose a payment processor that meets the business’s needs. Businesses should consider factors such as pricing, features, security and customer support when selecting a payment processor.

Providers like Stripe take a comprehensive approach, making it easy for businesses to build a unified payments, billing and omnichannel commerce ecosystem that encompasses more than just payment processing. This approach is becoming more popular as businesses move away from piecemeal payments infrastructure, which is not only more complicated and prone to inefficiencies and security risks, but typically wastes time and resources compared with a unified approach.

2. Set up a merchant account

If a business’s payment-processing provider also offers the functionality of a merchant account, as Stripe does, then that business won’t need to open its own merchant account to start accepting online payments.

Otherwise, businesses will need to set up a merchant account with their payment processor or acquiring bank. This account will allow the business to receive funds from transactions and to manage its finances. The application process typically involves providing business and banking information, as well as undergoing a credit check.

3. Integrate a payment gateway

Once the merchant account has been set up, businesses will need to integrate the payment gateway into their website or mobile app. This involves adding code snippets or plugins that connect the payment gateway to the business’s platform. Most payment-processing providers, including Stripe, offer flexible integrations for a wide range of use cases.

4. Test and launch

Before launching online payments, businesses should thoroughly test their payment-processing system to ensure that everything is functioning properly. This includes making test transactions, checking for errors and verifying that funds are being settled into the correct bank account. Once everything is working as expected, businesses can launch online payments and start accepting transactions.

5. Optimise and monitor

Finally, businesses should monitor their online payment-processing systems continually to improve performance and prevent fraud. This includes tracking performance analytics and using the data to inform optimisation and growth strategies. This could also include implementing additional security measures, analysing transaction data and refining the checkout process to reduce basket abandonment rates.

How to choose an online payment provider

Payment processors need to stay up to date on the ever-evolving, highly complex, ultra-competitive world of online payments, and it’s important for businesses of all shapes and sizes to choose a payment provider that meets their unique needs.

Early-stage startups, emerging brands or brands that are only just expanding their e-commerce footprint might have resource constraints that preclude building an in-house payment-processing setup. Larger businesses and established e-commerce platforms may have more resources but, at the scale they do business, each mistake and operational inefficiency costs them more – and each improvement could increase revenue significantly.

With so many providers on the market, it can be difficult to know where to start. Here are a few key factors to consider when evaluating your options:

  • Value
    Typically, payment providers charge a percentage of each transaction as well as a flat fee per transaction. Businesses should compare fees across different providers to determine which provides the most value – this isn’t necessarily the provider with the lowest fees. Consider which features are most valuable to your business and which features each provider offers. Then carry out a more nuanced calculation of overall benefit versus total cost.

  • Security and monitoring
    Payment processing involves sensitive customer information, so security is a top concern. Businesses should look for payment providers that offer strong security features such as encryption, transaction monitoring, fraud prevention and chargeback protection. Providers should also continue to refine how they handle fraud detection and prevention – which is constantly changing – and how they flag up suspicious transactions or customer behaviour.

  • Customer support
    Inevitably, businesses run into issues with payment processing, so responsive and helpful customer support is important. Businesses should look for payment providers that offer round-the-clock support and multiple contact channels.

  • Integrations and ease of implementation
    Businesses should choose a payment provider that integrates easily with their website or mobile app. This will make the payment process smoother for customers and reduce the risk of errors or technical issues. Look for a provider, such as Stripe, that offers an expansive and flexible set of payment solutions that can be integrated with minimal effort.

  • Payment methods
    Payment providers may offer a variety of payment methods, including credit cards, debit cards, digital wallets and bank transfers. Businesses should consider which payment methods are most popular with their target audience and choose a payment provider that supports those methods.

  • Reputation
    Finally, businesses should research the reputation of the payment providers they are considering. They should look for providers that are executing online payments in an elevated way, with a history of reliable service and positive reviews from customers – particularly other businesses in their industry at a similar stage and with needs that resemble their own. For example, an e-commerce platform might get inspiration from Stripe customer Shopify.

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