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How to collect payments online

GoCardless
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Last editedJul 20222 min read

The ability to accept payments online is vital for any modern business. According to Statista, the global market for retail e-commerce sales grew from $1.3 trillion in 2014 to $4.9 trillion in 2021, and is predicted to hit almost $7.4 trillion by 2025. If your business isn’t able to accept payments online by offering the right payment method in the right region, you’ll miss out on huge opportunities and fall behind the competition. 

Ways to accept payments online

The good news is that learning how to accept payments online has never been simpler, thanks to GoCardless. Working as a dedicated payments platform, we make it easier than it’s ever been for you to collect payments directly from your customers’ bank accounts. From online checkouts to ongoing subscription models, we enable you to select the payment method best for your business model. In the UK and Germany, for example, we offer the Instant Bank Pay solution, meaning that you send a link to a customer so they can make a payment seamlessly and instantly. This is just one example of how we harness the power of open banking technology to provide complete flexibility. 

How to choose the right payment method

In simple terms there are three basic approaches to accepting online payments:

  • Handling everything yourself by signing up for a merchant account and payment gateway

  • Using a third-party payment facilitator such as PayPal

  • Setting yourself up to take Direct Debits from customers

The ultimate aim of anyone aiming to accept payments online is to be able to offer the widest range of options to customers and potential customers. From debit and credit cards through to bank transfers, digital wallets and direct debits, the more options your business is able to offer, the less friction customers are likely to face when completing a purchase.

In many of the most developed online markets, accepting payments involves accepting card payments. For this method, you need to have a merchant account and create a payment gateway on your website, or sign up to a payment facilitator. A merchant account is an online bank account which holds the money a customer has paid while the payment is being approved by their bank. It is distinct from a business account, and acts as a holding area for funds to sit until they are cleared to be transferred to your account.

Most major banks offer merchant accounts, although third-party options are also available. There are costs involved in setting up a merchant account, including monthly minimum fees, transaction fees and authorisation fees. In some cases, the option of a set monthly charge is replaced with a percentage charged on each individual sale made.    

Payment gateway

The payment gateway is the name for the software making it possible to accept payments online. It is the part of your website which works with the merchant account to collect each customer’s card details, authenticate the transaction and keep all this information secure.  

Payment facilitator

A payment facilitator is a third-party company offering merchant services to your business. The payment facilitator processes many merchants’ card payments in bulk, so it is able to reduce the costs involved for you, and the flat rate usually charged makes it easier for you to budget. As well as online payments, the payment facilitator lets you take card payments in person and over the phone.  

Direct Debit

Direct Debits offer a different payment model to one-off online payments, giving you permission to take regular payments from a customer’s bank account, usually on a monthly basis. The payment details only need to be provided once, but because the amount taken can vary, you do have to inform the customer of any changes. 

Accessing the direct debit system can be a long and complex process unless you work with GoCardless and can integrate seamlessly with business software such as Xero.  

We can help

GoCardless is a global payments solution that helps you automate payment collection, cutting down on the amount of financial admin your team needs to deal with. Find out how GoCardless can help you with one-off or recurring payments.

Article sources

  1. https://www.statista.com/statistics/379046/worldwide-retail-e-commerce-sales/

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