Online payments: An introduction

When it comes to online payments, the methods you offer your customers can have a big impact on your success.


Online payments, especially recurring online payments, form a fundamental part of many businesses' revenue streams. However, each online payment method has distinct advantages and disadvantages. What might be well-suited to one kind of product, service or market, may be unsuitable for another.

This is critical. Many businesses that take recurring payments or subscription payments undervalue the strategic significance of which online payment methods they offer their customers. The way you accept payment from your customers impacts not only your revenue, but the growth of your business.

This guide will help you more deeply understand your options for taking online payments, covering:

  • Which online payment methods are available
  • How they work
  • Frequently asked questions about online payments
  • How your choice of payment method affects your business
  • How to choose which online payment method is best for you

No single online payment method is perfect in all cases, but this guide will help you identify those that are best-suited to your business.

What are online payments?

Online payments are payments that are initiated over the internet for goods or services purchased either online or offline. Common methods to facilitate this include:

  • Bank Debits via online mandate (often referred to as Direct Debit - which is the terminology we’ll use in this guide)
  • Bank transfers (also referred to as wire transfers)
  • Online credit or debit card transactions
  • Digital wallet payments (such as PayPal)

Payments can be one-off (e.g. e-commerce transactions like purchasing clothing) or recurring (e.g. subscriptions to services like Netflix or Spotify).

How do I take online payments for my business?

For your business to take online payments you can either take them directly yourself or pay an intermediary to take them. Each approach has its merits, as this guide will explain.

What the exact process for taking online payments looks like depends on the payment method in question. The following entities are typically involved:

  • The customer
  • The customer’s bank (or other entity that holds the funds they’re paying with - e.g. a digital wallet)
  • The business (often referred to as the ‘merchant’ - we’ll use these terms interchangeably in this guide)
  • The business’ bank
  • Organisations that help authorise and process the transaction, resulting in the funds being transferred from customer to merchant

In the following pages of this chapter, we explore the payment process for four common online payment methods - Direct Debit, bank transfers, credit and debit card, and digital wallets.

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