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.
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:
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