Online payments and donations: benefits of e-commerce
e-Commerce: choosing your payment methods
There are different payment methods for online transactions. The following is a brief summary of the main types and how they operate.
| Payment method | What you need to know |
| Credit card | The credit card is one of the most popular online payment methods because of its ease and convenience. However, you must protect the credit card details of your customer or donor. As some customers, donors or supporters may not like providing credit card details online it is often good practice to provide an alternative payment method.Different credit card brands have different transaction costs associated with them. You can choose which credit cards you accept. Your merchant account provider will have information on these costs.A number of new services available from credit card providers make online credit card purchasing more secure for your customers, donors or supporters. These include:
If you accept credit card payments you will get an acceptance message (confirming or declining the transaction) almost immediately so that you can go ahead and deliver the goods or services. The payment will usually settle into your account overnight or, at the latest, within 48 hours. |
| Debit card | In Australia, EFTPOS or ATM cards cannot be used online because they require a PIN. Recently, credit card providers have begun issuing debit cards which use credit card payment processing technology to access funds directly from the card holder’s account. This means that people who previously did not have access to credit cards are able to use credit card payment functionality.If you have a credit card processing facility on your website you can accept this new type of debit card without making any changes. |
| Direct deposit and direct debit | Direct deposit occurs when a payer transfers money directly from their own account to another bank account.Direct debit refers to an authorisation for a regular and automated electronic funds transfer, for a monthly bill for example. These methods can be a good alternative to offer customers, donors or supporters who do not wish to use credit cards online.If you offer a direct deposit payment option you need to make your bank or credit union account details available to the payer. This is usually done on request rather than publishing your bank details on your website. The details you need to provide include, at a minimum, the BSB and account numbers, the name of your bank or credit union, and the relevant branch. You should check with your financial institution to ensure you have the correct information before providing it to someone to pay you.
When accepting direct deposit payments you should instruct all payers to include a clear way for you to identify a transaction so you know when the payment is received. (This is often done by providing an invoice number to the payer for inclusion as a note in the transaction.) Direct deposit and direct debit payments usually take 24 hours to clear into your account, but can sometimes take longer. |
| Cheques and money orders | Cheques and money orders have become increasingly rare as payment methods for online transactions because of the time taken to send, receive, and process the payment. As for direct deposit payments, you should ensure all payers include some reference with cheques or money orders to help you identify the transaction. The same caution you use when accepting cheques in the physical world should apply to cheques you receive for online payments. |
| Online payment services | PayPal, Paymate, eWAY and payclick are online payment service providers that act as intermediaries between merchants and consumers. These online payment providers allow your customers, supporters or donors to pay by credit card or electronic transfer without you capturing their credit card or bank account details. Once customers have transferred funds into your PayPal, Paymate, eWAY or payclick account you can then transfer your funds into your bank account. |
| Electronic bill payment services | Electronic bill payment is a common way for large organisations with many customers to allow those consumers to pay their bills over the internet. These are most useful when your organisation is invoicing many customers, donors or supporters regular amounts (e.g. monthly bills). It may not suit one-time purchases or donations without a prior invoice. BPay and Australia Post Bill Pay are two of the largest providers of electronic bill payment services in Australia. |
It is best practice not to deliver goods or services to any online customer, donors or supporters until you have confirmation that you have received valid payment, whatever payment method you are using.
In selecting the payment method(s) to offer your customers, supporters or donors, pay careful attention to the cost and terms on which payment services are offered. In evaluating the options, you may also want to balance the terms and fees against consideration as to how many steps a customer has to go through to complete a transaction. For example, some methods (such as credit cards, online payment services or electronic payment services) may offer a more seamless and immediate online payment experience than those which require additional offline steps (such as writing a check). If you choose to use credit cards as your payment method, you should also consider using a payment gateway service.
Remember that credit card and other payment details provided by your customers, donors or supporters are extremely sensitive pieces of information. When dealing with this information, you will need to pay attention to privacy and security issues.
Merchant accounts
You will need a merchant account to be able to accept credit card payments. This is a specific kind of bank account for receiving payments from credit and debit cards.
If you have a merchant account with a terminal or imprinter to take card payments in the physical world, you can probably use the same merchant account for online transactions, but you will need to confirm this with your bank or credit union first.
Financial institutions usually charge set up fees, transaction fees and account keeping fees for merchant accounts.
