How to manage online payments

Retailers in the UK are now processing more and more online payments. In fact, in January 2008 there were £4.5bn worth of online transactions - a 75% increase from the year before. This guide shows you how to get started with online payments

Why take online payments

  • Having an online presence will boost your revenue and ultimately give your business a more rounded reputation
  • Trading online can make you more competitive and attract new customers
  • Taking online payment means your business has a global reach

What equipment do I need to start trading?

  • To start trading online you will need an online merchant account - even if you already have one for face to face trading, you'll still need an additional one to trade online.
  • You'll also need an online 'shopping cart' and payment system for your users, which will require you to link your account to your website using encryption software.
  • You don't have to build your own credit card payment system linking your acquiring bank to your site. Your shopping cart 'payment engine' or 'gateway' feature will link with your payment service provider and process customers' details
  • Payment can also be accepted through a third party such as Paypal

Things to consider

  • Because online payments are customer not present/ card not present (CNP) transactions, there is a higher risk you will be exposed to fraud.
  • You should think about taking professional advice to ensure there are no holes in your site's security and that shoppers are safe using your service
  • Your acquiring bank may request for you to provide a security bond, in case of card fraud
  • Assuming you are not a web developer, you will have to pay for encryption software and for someone to install it on your website.
  • If you don't accept card payments already, you may prefer to use a payment processing company, which will charge you a few pence per transaction


  • When applying for an internet merchant account, you'll have to supply details of your business's cashflow  and of how you plan to promote your online site
  • Be prepared to provide the bank with your suppliers' details
  • Have your online trading terms and conditions prepared
  • Have details of your secure server to hand


Do I need to re-launch my site if I am introducing an e-commerce feature?
As your online presence counts as a second shop window, it is worth investing in an impressive, accessible and easily navigated site. However, if your business is testing out online shopping, don't feel you have to build a brand new site from scratch. The level of your investment should ultimately depend on how important e-commerce is to your business.

Jargon buster

Acquirer: a financial institution such as a high-street bank that offers credit/debit card enabled merchant accounts

Internet merchant account: a merchant account for web-based transactions

Payment service provider (PSP): to take for credit card payments over the web, you need a payment service provider. Some Acquiring banks offer PSP as part of their service


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