Accepting online payments
Online payment jargon
Debit and credit card payments and their application online involve some key concepts and jargon.
An acquirer can be a high street bank or other financial institution that offers credit and debit card accepting/processing services. It acquires the money from the customer, processes the transaction and credits your account.
Internet merchant accounts (IMAs)
You need to apply for a merchant service agreement if you want a bank to handle your electronic payments. For web-based online transactions you need an IMA.
Obtaining an IMA from an acquirer may be quicker and easier if you already have 'offline' card-processing facilities set up. In this case, just ask your acquirer for an additional IMA ID for use exclusively with internet transactions. This process is normally quick, especially if the risk to your business does not change.
Payment service providers (PSPs)
A PSP will provide you with a 'virtual' till or terminal that collects card details over the internet and passes them to the acquiring bank. To take electronic payments over the web, you will need a PSP.
Your choice of PSP will depend on its cost and compatibility with your chosen e-commerce software solution. A fixed monthly fee starts at around £10, but there are some cheaper options available, starting as low as 5 pence per transaction. Usually, the higher your transaction volume the lower the rate you will be charged.
Some acquiring banks offer PSP services as part of their product and there are other less expensive options available.