Accepting Payments Online

By Nathan Lyle (Web Maestro) - January 30th, 2010

Allowing clients to pay an invoice, selling products, providing subscriptions... there are many reasons you may want to be able to accept payments through your website. Unfortunately, it can be one of the more confusing and frustrating things to put in place. It might be that you have been unable to find the right service, or a service was recommended that didn't end up working out. However, even after any bad experiences you may have previously had, the benefits are worth a second look.

There are two main types of payment systems: third party online processing services, and payment gateways. The primary differences involve how you access your incoming payments, the costs of the service, and the method used by your customers to make a payment.

Third Party Online Payment

The quickest way to be up and running, and often the cheapest, is to use a third party payment service like PayPal. Typically there is little to no cost for signing up, and the only fees involved are per-transaction fees (which you will pay with just about any method of accepting credit cards). After you receive a payment, you would then transfer the funds manually to your bank account.

One of the main disadvantages is that a service like this is not a bank account in the traditional sense. You don't have the same protections and insurance you would otherwise have. It also means that your customer has to jump through extra hoops during the payment process, and leave your website to complete the payment.

This solution is ideal for small businesses looking to experiment with selling their products online, or who only need to accept occasional payments.

Payment Gateway

Utilizing a payment gateway involves more setup, and can cost more, but typically provides more options and looks more professional. A payment gateway is a service that securely connects your website to your merchant account to transfer payment information for processing. If you already have a merchant account, you may want to start by asking if a payment gateway is part of the services you're already paying for. Payment gateway providers like Authorize.Net can also provide a merchant account if you need one.

The two main advantages of using a payment gateway is that funds can be transferred directly into your bank account, and your customer never has to leave your website. Most payment gateways also provide a developer API which lets your website developer customize your payment pages as needed. While setup is usually best handled by your technical staff or outsourced to a developer, the payment gateway service will typically have easy-to-use interfaces for reports and account management.

This solution is ideal for businesses or organizations looking to accept credit card payments online frequently, or who want to ensure the most professional appearance and customer-friendly experience.