Determining how you’ll take payment through your eCommerce store is part and parcel of setting up your online business. It can also be a time-consuming one if you don’t know where to begin.
That’s why we’ve put together a handy primer to take you through the basics – hassle-free.
Merchant accounts and payment gateways
These are terms you’ll frequently come across when setting up your online payments. Let’s get the terminology out of the way first.
A merchant account holds the funds from your customers’ credit and debit card payments, then passes them along to your nominated bank account. It’s a sort of digital cash register temporarily housing the payment from a purchase before it’s later banked.
A payment gateway authorises the payment being made, checking for issues such as credit card expiry dates or sufficient fund balances. The payment gateway functions to approve or decline the transaction.
Choosing your merchant account
You have a two options here: setting up your own merchant account, or working with a third-party provider. If you’re a KongPay user, you’ll be automatically set up with your own merchant account.
If you're not a KongPay user, opting to use third-party provider can be a simple way to get started. Initial set-up and software fees are typically lower – but bear in mind that third-party providers generally charge higher transaction fees. Over time, this can add up.
Some companies like PayPal and Stripe act as a merchant account ‘aggregator’. Instead of issuing a separate merchant account for each business, they pool together their customers into one main merchant account.
This can mean a quicker set up process as they're not carrying out the underwriting of a merchant account, but because they know very little about your company they can freeze your account or hold money if they think anything looks unusual.
So whilst not having a traditional merchant account might appear easier in getting started, you will have less protection and control over your business.
Choosing your payment provider
Some online eCommerce platforms will allow you to choose to incorporate multiple payment gateways. For example, you can choose to accept MasterCard payments through PayPal and Visa Debit payments through KongPay – leveraging the best rates for each payment gateway.
Factors to consider when choosing your payment gateways include:
- Your target audience and their preferred payment options
- The ease of use of the payment gateway
- The fees charged by the gateway
- The customer support offered by the gateway.
Different audiences will have different preferences for how they pay for your products. For example, Paypal functionality may be handy if your target audience is younger or largely foreign.
The overall user experience is another element to think about. A payment gateway that offers an integrated checkout should generally jump to the top of your list. These gateways allow your customers to complete their purchase without leaving your site – making the experience seamless, professional and credible.
The fees charged by a given gateway will also be a factor. Some charge a per transaction fee, while others may charge a flat monthly fee. In some instances a single gateway will be most cost effective, while in others you may want to incorporate multiple gateways. The most appropriate model for you will depend on the cost of your products and the volume of your sales.
Finally, consider whether customer support is something you may need to lean on. Some payment gateways offer just-the-basics solutions such as guides or online documentation, while others provide all-hours Live Chat or telephone support. You may find yourself paying a little bit more, but it can be worth it for the peace of mind.
Setting up your merchant account and payment gateway
If you’d like to take things into your own hands, you can apply for and set up your own merchant account. You can do this using an intermediary, or sometimes through your payment gateway – some services come handily bundled with a merchant account offering.
When applying to set up a merchant account or payment gateway service, you’ll be asked to provide basic information about yourself and your business. Sometimes you’ll be tasked with filling out this information; in other instances, this information may be auto-filled using existing data, and you’ll simply receive a document for signing.
Ready to get started taking payments through your Kong store? We’ve put together some guides to help you through the next steps: