Accepting online payments

Setting up an internet merchant account

To accept credit or debit card payments directly online, you'll have to set up an internet merchant account (IMA).

There are several banks and processors that currently offer IMAs. These are referred to as merchant acquirers or acquiring banks - see the page in this guide on how to find a bank to process your online payments.

Even if you already have a merchant account for face-to-face transactions, you will still need one specifically to accept online payments.

Card users will visit your internet shop to order your goods or services and make payments, and the funds will usually be in your bank account after three or four working days.

Beware of fraud

Online card payments are classed as 'card-not-present' transactions, because you can't physically check the card or the cardholder. If a transaction proves to be fraudulent, the money will be reclaimed from your bank account - this is known as a chargeback. Even if a cardholder-not-present transaction is authorised by the cardholder's bank, this doesn't necessarily guarantee payment.

To help guard against fraud, where a cardholder claims that they did not authorise a payment, check to see if your online payment card processor can offer the card scheme's authentication service - MasterCard SecureCode and Verified by Visa.

The costs

Acquiring banks will charge for their services. There may be a sign-up fee of around £200, and day-to-day charges may be a fixed fee in the case of debit card transactions or a percentage of each transaction for credit cards.

In addition, where you are using a payment service provider, they will charge you for their service.

If you don't meet the requirements for an IMA, or it's not cost-effective for your business, you can consider using an online payment-processing company or an online shopping mall to handle card payments for you - see the pages in this guide on using a payment-processing company and selling through an online shopping mall.

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