Findings from the 2004 SME Audit show clearly that
transactional websites are very much in the minority. Yet the
ability to be able to process payments online gives your business
many advantages. Gary Flood looks at how technology can be applied
effectively and securely to support online
trading.
Chances are you’ll be buying things for yourself online and it’s
just as likely that you’re not extending the same opportunity to
your own customers. The reality is that many small to medium sized
enterprises’ websites are still at the stage where larger
companies’ ones were two years ago; basically online brochures for
their goods rather than places to buy items from, or through which
you could pay suppliers.
But just as ordinary consumers are beginning to use the web with
more and more confidence, companies of all sizes are looking once
again at the net as a place to do business. Crucial to growing
ecommerce is security.
Here, smaller companies may have further cause for hesitation
following recent headlines. In November 2003, the Royal Bank of
Scotland’s Worldpay service for secure credit card payment, which
claims a 40% share of those smaller companies which are trading
online and 28,000 users worldwide, was slowed to a crawl –
inconveniencing both shoppers and merchants – by hackers.
The denial-of-service attack has been described as the “most
serious and sustained Internet attack on a UK business to date”,
with Worldpay beleaguered for three days.
The good news is that no customer data was compromised; performance
was severely impacted, but even that was back to acceptable levels
in a relatively short time. In other words, secure online billing
and payments seem at last to be at a level where they are safe for
companies of all shapes and sizes to try.
But there’s no getting around the fact that at the heart of online
trading will be credit cards, and you must be set up to handle
them. Datamonitor figures show 90% of all online transactions are
made this way, and by 2005 some $3.9bn worth of internet
transactions will take place in the US and Europe.
Yet every merchant knows that credit cards can be tricky to handle,
considering the various security issues and restrictions banks and
authorisation companies can put on them. There’s light at the end
of this tunnel, though, as a number of solutions are now coming on
stream that offer ways for organisations to handle credit card
payments. Although there is some advanced technology in all this, a
number of third parties are all actively vying for your business in
this area.
That choice, of course, brings with it the issue of making sure you
pick the best solution for your business. “Some systems are OK as
far as they go, but are cheap and look it,” says Barry
Mills, managing director of Netstep Communications, an internet
agency based in London.
Popular systems
Your options start with storing customer data on your website,
then manually offloading it, which as it sounds could be the
unwelcome combination of both cumbersome and insecure. Next up is
going with the very simplest but hugely popular systems like the
eBay service Paypal.
The next step is talking to payment gateway providers such as
Netbanx; and at the top of the current ecommerce spectrum, working
with Worldpay, where you get both the gateway and the internet
merchant account combined.
Mills and others stress that your choice shouldn’t be driven solely
by cost. “In most cases that’s the wrong approach – for a start,
most suppliers are very flexible, and you don’t want to limit your
options. We have had engagements too where the solutions were the
wrong ones for the client. Your choice should really be on
appropriateness to your business needs, and if you’re not an expert
in this technology, seek advice.”
This is why some think those services backed by banks – such as
Worldpay and the Royal Bank of Scotland’s other service, Fastpay –
will tend to win out over independent offerings like Paypal.
“Banks have a trusted brand, and they tend to have better access
to the core payments services and networks. And they’ll probably
have a relationship with you as a business already,” says Michael
Keegan, chief executive of Magex, the firm supplying the back-end
technology to the Fastpay system.
Another choice, as so often with companies like yours, is to ask if
a third party, such as your web hosting agent or internet service
provider (ISP), can take this headache away. But be warned – the
same financial structures that apply to taking credit card
information in store apply as stringently online, which is the
philosophy behind the current generation of security moves by Visa
and Mastercard.
“The SME’s problem here,” says Ron Carter, payments product
manager at UK security firm nCipher, “is that if the customer says
he didn’t make the purchase the blame goes to the merchant, not the
credit card company.”
Still, the message is clear: ecommerce and secure online billing
and payment are available to a wider and wider group of companies
and merchants, but your choice of solution still comes down to your
individual business needs.
Whatever path you take, the promise is that as society embraces the
online experience, so your company could benefit. “Think of online
commerce as a shop where we’ve only really had one or two stickers
in the window telling you how to pay,” suggests Magex’s Keegan. “In
the next year that’s going to change, and I think that will unleash
a lot of pent-up demand which will be good for companies and
customers.”
Another way of putting that would be that given that a significant
amount (40%) of online shopping takes place out of work hours, why
are you ignoring all that potential business?
Who are the players?
Credit card companies are developing new internet authorisation
payment initiatives, which will be branded to the consumer as
Verfied by Visa and Securecard from Mastercard. Think of it as the
online equivalent of the chip and PIN initiative you may also be
having to deal with. Place to research:
www.visaeu.com
BTOpenworld
(
www.btopenworld.com/broadband/forwork/solutions/itp/payment.html)
has launched an Internet Trader Pack which includes the ability to
set up a web shop. It costs £160 per year plus set-up and monthly
fees.
Worldpay (www.worldpay.com)
and Fastpay (www.fastpay.com)
are examples of the leading payment service provider companies;
both are businesses of the Royal Bank of Scotland but are aimed at
different sized businesses.
Other players you may come across include Barclays EPDQ, Pick And
Buy, and Netbanx.
There are a large and growing number of so-called payment service
providers, including companies like Holland’s Bibit
(www.bibit.com)
A new entrant is a peer-to-peer based system from a company called
Navio (www.navio.com). It’s
offering an online ‘locker’ where customer cash and credit
information can be stored while it brokers the transaction between
buyer and seller. It is also launching a consumer marketplace where
you could list and sell digital goods without even having a
website.
Other websites worth looking at:
www.ncipher.com
www.actinic.co.uk
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