What to consider for your ecommerce website?
You have created the perfect website for your fantastic travel product and now you need to ensure you have everything in place to accept payments online. Just a case of phoning up your bank and negotiating the cheapest price then? Price is important but do you really understand the cost you are paying, is it actually the headline price you saw and have you got the right components to effectively sell to your market? It may seem simplistic but there are a number of things to consider when setting up your ecommerce site. Yes product placement and pricing, both in terms of what you charge and what you are being charge, are very important but there are some practical considerations you need to make.
What do you need to process payments online?
So just to start with some basics – processing card payments online involve a number of different elements, so lets look at some terminology:
- Acquirer – this is the bank that is going to give you a Merchant Identification Number (MID) to take the card payment. This bank may be a high street name you have heard of or it may be a bank who only specialise in credit card processing. They will be specific to the region you work in.
- MID – the bank account number that funds will be processed through before being sent to your actual bank account. They are typically single currency, though it is possible to have a multi currency MID which settles to one currency, or to have multiple MIDs which settle to multiple currency accounts with your bank.
- Gateway – this is the piece you place on your website to take the card details from your client and send them securely to the acquiring bank and ultimately to your MID. This may be a redirection to a number page or something you inbuilt into your website (subject to your PCI requirements). There is often a setup fee, monthly fee and per transaction fee to pay (for successful and declined transactions, as well as for refunds).
- PCI Compliance – the Payment Card Industry standards that you need to meet to ensure you are protecting the security of the cardholders details. Even at the very lowest level you will need to complete a self assessment form.
- Fees – this is what you pay and is normally made up of a combination of one of the following elements:
o Interchange – this is the fee that the banks (the acquiring bank (yours) and the issuing bank (the cardholders) pay between themselves. It varies by card type eg Visa/Mastercard/American Express; by industry; and by country
o Interchange Plus (IC+) – this pricing means you pay the interchange fee plus a margin of x% which the bank sets.
o Interchange Plus Plus (IC++) – this is as per the above but the first plus is for the scheme fees – a card scheme may be a particular type of card with air miles etc and pricing can vary in percentage. Typically the scheme fees can vary on a daily basis. Scheme fees are built into the pricing in the IC+ model.
o Blended Rate – an acquirer or PSP may also offer you a blended rate where they take all the risk on cards from different regions and just build in the interchange, the card schemes and the margin. Often these can appear the most expensive rates but for you business might actually be the most cost effective subject to where you are selling.
In many cases the above can all be taken care of from one source, an Acquirer, or a Payment Services Provider (PSP) who may offer savings by bundling everything together and taking care of all the administration for you. Just be aware of all the elements though as equally sometimes it is cheaper to take them separately.
What are you actually paying?
We often hear that an acquirer is offering a rate of 1% (or better) over interchange or IC++, so this means that you have a pricing of about 1.3% right (based on European consumer IC being about 0.3%)? This maybe right but if you are selling to an increasingly global market you may actually paying a lot more – cards outside your region could mean the cost of the transaction is actually 3 or 4%. Likewise if you have a lot of customers paying by corporate cards the interchange is much higher and even domestically can cost over 2%. Its very easy to worry and get bogged down in what it actually costs but take advice from your PSP, review where most of your market comes from and also consider where you do a lot of cross border transactions to actually take on a blended rate. Just be aware that much promised headline rate which true may not be appropriate for what and where you are selling.
Do you know your market?
If you are selling to a market outside of your own domestic one are you losing out of sales because you only support your base currency? Worldpay did a survey in 2015 amongst travellers and established that 25% of people would not actually complete a purchase on the checkout page of a website if they had no understanding of the value of the product in their own currency. For sales to India and China 1 in 10 people apparently actually leave on the homepage if they don’t see prices in their own currency. So being able to sell in different currencies can add value and increase sales. Not only this but you can reduce your process fees and Visa and Mastercard are set to add fees from March 2019 for cross border sales where the currency is not supported by the merchant.
Furthermore in many regions card payments are not the most popular form of payment for ecommerce. In Germany, for instance, card payments only make up 50% of ecommerce transactions and automated direct debits are actually more popular. Likewise in many parts of South America paying by instalments is very popular and in South Africa paying from your mobile credit is a popular form of payment. If you sell to some of these markets have you factored in the need for alternative payments and does your gateway support them?
Are you secure?
Not only does a secure website increase customer sales but it is also a requirement that you process sensitive information on a secure server. There is a cost to this but it does not need to be high and a redirect to a third party gateway which not only supports an SSL but also is fully PCI compliant is an effective way of keeping this to a minimum. If you don’t take this on you risk fines, but worse that people either do not trust your site, or alternatively using it fraudulently.
And what about fraud?
The big elephant in the ecommerce room is fraud. Sadly it’s a reality of ecommerce that for whatever reason be it genuine fraud, or the not so friendly “friendly fraud” merchants from time to time get hit by chargebacks. Never worry about this but ensure you have the right tools in place to fight this. Your gateway is usually equipped with tools like Address Verification Service (AVS) which checks the cardholders address matches what is in the system; velocity checks where you can limit the amount that can be charged and the number of charges to a single card over a period; and also IP checker which restricts how far the IP used to purchase can be from the cardholders registered address. There are a number of great third party tools as well which can help analysis your transactions before and after they have been accepted by the bank and then fail them based on an agreed rule set. You have to strike a healthy balance between ensuring you do not restrict good customers from paying versus minimising the fraudulent transactions you get through. Be vigilant, monitor your declines and the successes you have through.
Friendly fraud management is as much to do with customer services management as anything else. We alway suggest companies, especially in the travel sector, where possible, get an signature from a customer when they arrive at the service and that they follow up to ensure the service was enjoyed.
Starting to take payments online can be a daunting experience but there are plenty of tools, and lots of experienced companies to help you on your journey. Talk to the professionals, understand what your business really does and the true cost of this and you can focus on delivering excellent service in your area of expertise.
Trust My Travel came into being offering trust solutions to providers and their customers, and has now become the only financial solutions provider specifically intended for the travel sector.
With access to the largest international payments and currencies network in the market, including local payment capability to pay and receive locally, businesses use TripPayments to substantially decrease the cost of handling international payments and receivable requirements that gives a guarantee of payment amount protection.
Trust My Travel also removes the risks associated with having a currency exposure by offering a dynamic multi-currency pricing solution that allows your business to price locally and moves the exposure to your provider that will also provide an additional revenue stream to your business from your online cross-currency transactions.
New for 2017/18 – Worldwide MPOS. No longer just for ecommerce Trust My Travel can support your card present requirements wherever you are in the world.