Merchant Centre

Definitive guide to Payment Gateways

Ultimate Guide to Payment Gateways from POLi


If, like many New Zealand online retailers, you’re trying to get your head around the complexities of payment gateways, you need to read this guide!

This in-depth guide to online payment gateways will walk you through the key things you should be looking out for when trying to implement this online payment system. We’ll even do our best to demystify the dreaded ‘Internet Merchant Bank Account’.

Contents

Click on any of the links below to go to the relevant section of the guide.




A payment gateway is an Internet-based virtual infrastructure that helps to facilitate online transactions between a buyer and a seller. It processes the payment by verifying the credit card and accepting or declining the payment on the seller’s behalf.
 
In order to have a payment gateway service enabled on your website, you have to sign up for the service and have a special bank account called an Internet Merchant Account into which the money can be transferred after it has been collected on your behalf. 

Business owner benefits

1. Tap into new customers

Offering your customers a variety of payment options is critical and that includes credit cards. A gateway will enable this and allow you to service many more potential customers.
 

2. Streamline your cashflow

Your online business won’t deal with physical cash in the same way that a store on the high street would.
If you conduct business online but only accept payment retrospectively (e.g. you send out an invoice and the customer pays directly into your bank account, then your cashflow may well be inconsistent). 

(Of course, you can use an Internet Banking solution like POLi or Account2Account – find out more here).

Similarly, if you run any kind of service, which charges customers on a recurring basis, you will need to request their payment information every time you take a payment. The risk here is that payments are late or missed altogether. Again, affecting your cashflow.

By offering online payments at the point of purchase, your cashflow will match your sales will is easier to reconcile and better for running your business.

3. Let them worry about the security

Payment gateway providers spend a considerable amount of money investing in security so you don’t have to!
But let’s say you decided not to use a gateway and instead opted to collect, store and process all of the credit data yourself. What would the implications be? 

Well, in short, your business would be held accountable for the security of the data. If your servers were to crash, or your website got hacked and that data was made vulnerable to theft (or lost), you would have a legal nightmare on your hands. A gateway will take care of all that for you (for a fee).


Customer benefits


Payment Gateways provide a convenient, quick and secure way for customers to make an online payment through a choice of credit cards.

All gateways must comply with the Payment Card Industry Data Security Standard (PCI DSS) which offers a minimum level of fraud security (and protection) for your customers and, by extension, your business. 

Customers also tend to feel more assured in providing credit card details to a third party rather than to the website owner itself.



How gateways work

Once the customer has checked out and selected the option of paying by credit card, the payment gateway service takes over the payment process for the merchant. 

 
Payment Gateway Payment Process - POLi Ultimate Guide



To understand the process and how it works, here is a step-by-step summary:

1. A customer buys an item from the merchant and puts in a credit card number at the checkout screen or if he is buying through a phone answering service, enters his bank credit or debit card number. This initiates the payment service.

2. If the payment is being made through a computer, then the information entered is encrypted by the buyer’s computer browser using a SSL encryption and forwarded to the merchant’s site for further action.

3. Details of the purchase, the amount etc. are conveyed by the merchant website to the payment gateway for processing. Here too, the information is encrypted before it is forwarded.

4. This information is taken by the gateway and is conveyed to the merchant’s bank account.

5. The information is accepted by the seller’s bank and the transaction details are forwarded to the buyer’s bank for authorization by the card issuing authority.

6. Based upon a number of factors, the buyer’s bank can either accept or reject the payment. The card issuing authority will generate a response code based on the fact whether the payment was accepted or rejected.

7. This information goes back to the payment gateway and is then transmitted back to the merchant’s bank account. Here the information is interpreted as relevant or not and is forwarded to the buyer and the seller.

8. The transaction details are then sent to the merchant to inform him whether the sale has been made of not. It provides both the buyer and the seller with a transaction ID for future reference. It takes only a few minutes for this entire process to be completed.

9. If the buyer’s bank approves the payment, the sale is clocked and the money is deposited into the seller’s bank account at a scheduled interval. 

The seller has to submit all the authorized payments in a batch to his bank at a predetermined interval. The bank then deposits the approved amount to the seller’s bank account. This entire process can take between 2-4 days depending upon the settlement schedule.

How is a payment gateway different to a shopping cart?

Shopping carts and payment gateways are often confused as being the same thing. In fact, they are two completely separate components that are part of the payment process.

Shopping carts allow customers to select products and services on a website and ready them for purchase, while payment gateways actually facilitate the process of payment.

Charges & fee structures

Like all services, payment gateways charge a fee. The payment structure differs between gateways and can be quite confusing for people starting out. 

Think carefully about what your business requirements are and reconcile them against the fees for each gateway provider before signing up.

The charges may include any or all of the following:

Transaction fees

The percentages vary between 2 – 6% of the total transaction amount. In addition to the transaction fees, gateways also often charge a flat rate fee per transaction to cover the Merchant Sales Fee (MSF) levied by the credit card schemes. The credit card company, merchant account service and the payment gateway share the commission. This fee can vary from company to company. 

Monthly fee

Most payment gateways charge a monthly fee. For some gateways this could be a tiered system with the fee increasing with the number of transactions and service used. The fee includes the administrative charges for your account, plus fees for services like fraud detection, auto billing and customer support.

Set up fee

This is the initial sign-up fee that you may be charged for initiating a merchant account. This is usually a one-time charge and can vary from one service to another.

Other fees

Besides these fees, there are others that may be charged including chargeback fees, security and support, fees for recurring billing and currency conversion charges for international payments.
 

Are there any risks involved?

The biggest risks involved with using a payment gateway are credit card fraud and prepayment risk. 


Credit card fraud

Credit and debit card fraud occurs when the card details are stolen and then used to make purchases online by someone other than the cardholder. The details of the card can be stolen while the customer is physically making a point of sale swipe of his card or through phishing attacks. Once the details are with the thief or hacker, they can use it to make purchases online. All reputable payment gateways have procedures in place to prevent such fraud.

Prepayment risk

A prepayment policy is where the purchaser has to pay for goods or services in advance of receiving them e.g. membership subscriptions. 

The customer pays the merchant in advance, in good faith, in the belief that the goods that have been purchased, will be delivered on time, will be of good quality and will arrive in perfect condition. If for some reason the goods are not as specified or cease to be available (e.g. the website the customer is paying a membership to closes down), the customer is at risk of losing their money.

Most payment gateways have very stringent policies regarding prepayment. They ensure that the customer does not lose his or her money and that it can be returned to the buyer if there is a dispute or the buyer is dissatisfied.

Top 5 payment gateways in New Zealand

Flo2Cash

Flo2Cash provides credit card services to enable merchants in receiving their payments as easily as possible, whether it be over a landline phone, internet or your mobile phone. All transactions are processed in real time. Like Swipe they’re able to offer a bundled service negating the need for a facility from a bank.

https://www.flo2cash.com/nz

Paystation

Specialised payment technologies development for eCommerce entrepreneurships as a Paymark Certified Solutions Provider, PayStation is there to help you find the right payment solution for you and your customers. They support internet credit card payment through the following banks: ANZ, ASB, Bank of New Zealand and Westpac. Paystation was recently purchased by Trade Me.

DPS – Payment Express

DPS is a well known credit card/payment gateway provider in New Zealand. It offers a range of services including merchant hosted and non-hosted options as well as a simple manual credit card processing facility.

IP Payments

IP Payments offers a versatile service, and empowers you to handle any kind of payment. You can handle real-time transactions, batch payments, even recurring transactions. It is always good to give your customers the option to use their phone to complete payments and order products or services. Every third New Zealander owns a smartphone, and it would be purely illogical to ignore this market which is only going to get bigger.


SecurePayTech

SecurePayTech.com provides secure and affordable credit card authorization and processing services for on-line businesses. Comprehensive reporting of individual transactions combined with historical trend analysis keeps you firmly in control of your business.

Key Features to look for in a Payment Gateway


It feels like there are so many gateway options available to merchants; the fees involved and the level of service all seem to vary so greatly. 

There’s also the issue of ‘no one service fits all businesses’. Every business is unique in some way or other and so, therefore, are its needs.


What is your business situation?

From a business perspective, there are a few things you should strive to be clear on before you embark on your selection process (it is might be helpful to couch these points within a specific timeframe – e.g. 12 months):

1. Will your business trade entirely online or will there be a mix of online and physical payments? What are the proportions?

2. How rapidly do you expect to grow?

3. How many transactions will take place each month?

4. Will you customers likely want to use a mobile device to purchase from you?

5. Do you envisage charging deposits or recurring payments (or both)?

6. How long have you been trading? Do you have 24 months of business accounts (essential for getting an Internet Merchant Account)?

Core features of any payment gateway


Even though there is great variety in the solutions available, there are still a number of core features that you should compare and contrast. Think about the different types of payments you will need to receive and use that as a starting point.

Currency Support

Many merchants in New Zealand start their online business journey with ambitions of cornering a little market in this country. However, the opportunity to sell to customers in other countries (such as Australia) can arise very quickly (whether you want it to or not). It’s not uncommon to begin trading over the ditch within the first 12 months.

However, this decision comes with it to interdependent considerations:

1. Which currencies will the payment gateway accept (from the buyer)?

2. Which currencies will the gateway pay out in (to the seller)?

A gateway may only function in certain countries e.g. New Zealand or the USA but may be capable of processing credit card payments from whatever country the credit card holder lives in. Similarly, the gateway may process the sale in the seller’s currency or provide currency conversion at the point of sale, enabling international shoppers to see the price of the goods in their domestic currency.

HINT – before you do anything else, check that the gateway will operate in your home country. This sounds obvious, but it’s easier to miss than you might think.

Hosted or integrated checkout

There are essentially two ways of hosting a payment gateway: a hosted solution or an integrated solution. There are pros and cons to both.

Hosted Checkout
Most gateways offer a hosted option. When customers check out and are ready to pay they are redirected to a ‘hosted’ payment page(s), which enables them to complete the transaction. They are then redirected back to the seller’s website.

Pros

1. Easy to implement with very little technical knowledge required

2. Usually a very cost effective solution for start ups and smaller businesses

3. You can typically style elements of the hosted pages to make them look and feel more like your website

Cons

1. Redirecting customers to a separate set of pages to make payment can often make them feel uneasy.

2. There is potential to have a greater number of abandoned payments as a result of being redirected

3. Even with styling, the environment rarely reflects your website’s design to the fullest (i.e. it will still look like a different website).

Integrated Checkout

An integrated checkout basically means that the checkout and payment all takes place within a single environment – your website.

Pros

1. Integrated checkouts tend to look more professional

2. They tend to ‘feel’ more secure and trustworthy

3. As they are more customisable, they tend to work better with other add-ons you have in your store (and thus increase conversion rates)

Cons

1. Integrated checkouts require more technical expertise to implement than hosted checkouts

2. They are usually more expensive.

Mobile and Point of Sale (POS) support

If you run a business that accepts payments via an electonric POS terminal as well online, then you need to ensure your gateway supports/integrates with it.
 
Ideally, you will have all your payments processed in the same place. There really is no benefit to having to manage two different systems with their own fees and policies.

If your business uses mobile devices for receiving payments, then you should consider a payment gateway solution that integrates with your mobile operating system.

How refunds are processed

If you will need to offer your customers refunds (and what business doesn’t at some time?), then you should explore how they are managed by each gateway.

Some gateways actually offer a refund module that is integrated with your Merchant Account so you can seamlessly update all systems with the new payment information. 

However, this is quite sophisticated and many gateways don’t offer this level of integration.

Re-billing and monthly billing (e.g. membership fees)

If you need to offer your customers the option of paying in instalments or any kind of recurring billing, you will need a gateway that offers this functionality.

Security and Reputation

The security and reputation of the payment gateway you ultimately use can and will have a huge impact on your business’ reputation.

A key selling point of using a payment gateway is the security it offers your customers. Do your homework: ensure the gateway is secure and conforms to the Payment Card Industry Data Security Standard (PCI DSS) – at a minimum!
 
Look into how the service stores and uses customer data. Does it retain the data? If so, why does it do this and how long does it retain it?

Seek impartial reviews of the service online and see what other merchants are saying on social media about their experiences.

Pay-out Policy

Payment gateways act as an intermediary between the customer’s credit card scheme account and the Merchant’s Internet Account. The time it takes a payment to land in your bank account following a completed transaction can vary greatly from one gateway to the next.

All gateways pay out monies in batches that are processed periodically – daily, weekly or monthly. Depending on your business model and cashflow, you may want to look for a gateway that makes more regular payments or on the other hand you may have sufficient operating funds to continue with a less frequent payout policy.

Support

The level of support you can expect from your gateway provider is of critical importance. Be aware that service levels are typically tiered; if you want a greater level of service, you have to pay more for it. You need to figure out if it is worth it for the extra cost to your business. Research the options and see what their existing/previous merchants have to say about their service.

Questions to ask about Payment Gateways


1: Will I need an Internet Merchant Account?

This is potentially the most important question to ask; do not skip this step! Whilst most mid-large sized online businesses will most likely prefer to use their own Merchant Internet Account, many smaller businesses may find this a daunting prospect.

2: What currencies do you support in addition to NZD?

It is clearly critical that the gateway operates in New Zealand and accepts NZD. However, it is important to plan for future growth; is it possible you might be trading in Australia in 18 months?

3: Do you offer integrated checkout?

A seamless purchase experience on your website can often by the difference between a sale or no sale. Different gateways offer different levels of integration with your website; you should certainly consider this when weighing up your options.

4: How are refunds handled?It is inevitable that you will have to process refunds from time to time. Different gateways handle this in a variety of ways.

5: How secure is your service?

Your reputation for payment security is only as good as the systems you use. As a minimum, your gateway should comply with the Payment Card Industry Data Security Standard (PCI DSS). It may also offer additional levels of security for a tiered fee.

6: What is your payout policy?

You need to understand how the money received in a transaction ultimately makes its way into your business bank account.

A gateway does not make payments to your account continuously in real time; it is always batched and paid out periodically. This could be every few hours to once per month depending on the gateway and the service. 

If your business has cash flow challenges (and who doesn’t?), you should look for a service that offers regular small payouts.

7: What re-billing services do you offer?

Re-billing is a useful service for any merchant that might have a need to charge a customer multiple times without having to take their payment information each time.

Examples of this could be taking monthly membership fees, deposits or payment instalments
The key thing here is that the gateway has to allow the merchant to store the customers’ payment details. 

8: How much does your service cost?

Payment gateways are not free – and nor should they be. Different companies will charge for their services in different ways so ensure you have list of requirements to aid you in your research.

9: What are the terms of your contract?

It is critical that you understand fully how the gateway uses the sensitive data it processes on behalf of your business. You should also know how easy it is to cancel the service and what, if any, information you can take with you. 

If you require an Internet Merchant Account, there is even more paperwork!

10: Is it easy to set up the gateway?

New Zealand has many small businesses and with that often comes lower levels of technical expertise compared to our better-resourced corporate cousins.

Some gateways are incredibly easy to set up whereas others can be more complicated. Always confirm which merchant accounts it will work with and consult the support documentation before making a decision. If in doubt, hire the services of a professional.

Try to seek out clear instructions from all parties for how to connect your payment gateway to your website, connect it to your merchant account and ultimately your business bank account. The level of complexity will vary between solutions and whether you are opting for a hosted or integrated checkout.

HINT – try to find a way of running the gateway in a development environment and always read the support documentation before choosing the gateway.

11. What will my customers see on their credit card bills? 

Merchants often overlook this but it affects their relationship with their customers. Some gateways will simply show their company name on the statement where others may allow you to personalise the details with your business name. The bottom line is, find out how the charge will appear on your customers’ bills and tell them.

12. Who owns my data?

You are going to be processing large volumes of sensitive and important data: credit card details, payments, orders, and refunds to name a few. Before you sign up for any gateway service, ensure that you know exactly who owns the data that has been collected. 

13. How easy is it to cancel the service?

We’re talking about cancelling the service before you’ve even begun! Overly pessimistic? Perhaps a little but nevertheless you should still know how to go about cancelling your subscription to the gateway service if you had to.

You might need to give a notice period, pay a buy out fee or be forced to complete your contracted term. When you are dealing with a subscription as fundamental to your business as income and customer payment data, it pays to know.

The application process can be quite lengthy (and expensive) in New Zealand and it will involve a credit check (often an issue for start ups that don’t have 24 months of business accounts).



So, what is an Internet Merchant Bank Account?

Anybody who has begun the process of researching payment gateways will have heard the words ‘Internet Merchant Bank Account’. Some gateways seem to offer them as part of the package whereas others simply tell you that you need one before you can even start!

So, just what are these Merchant Accounts and why do some gateways offer them while others don’t? And why do I have to do a credit check to get one? Help!

What is a Merchant Account?

Internet Merchant Accounts are critical parts of a payment gateway. The downside is it’s hard to explain how they work, what type you need and how to get one.

A Merchant account is a special type of bank account that receives and holds funds that have been authorised by the payment gateway. It holds onto these funds for a defined period of time before transferring them to the business bank account in batches. That way, your business account is not receiving hundreds (or thousands) of individual deposits each day.

There are two types of Merchant Accounts.

Dedicated Account

A dedicated merchant account is one that belongs only to you. To get a dedicated Merchant Account, you will need to sign a legally binding aggreement with the issuing bank and you will usually have to go through an in-depth credit check. The payment processing companies take a risk every time they process a credit card transaction on your behalf as they bear the costs of credit issues and chargebacks.

So, it’s a complicated business and you will have to jump through a considerable number of hoops to satisfy all that you are not a risk to the underwriters.

Do you even need a dedicated merchant account?
That’s a good question and, as always, it comes down to the size of your business and volume of sales you are projecting. If you only expect to process 50 credit card transactions per month, it might not be worth the lengthy (and fairly costly) Merchant Account application process. (As well as the assortment of fees, legal contracts and terms of service.)

If you do project decent volumes of credit card transactions each month then a dedicated account could be a good bet. It would give you a lot more control over your money than an aggregator account (see below) in particular the speed at which you can access funds. 

You will sometimes see a merchant account bundled in with a Payment Gateway’s payment processing services. An example of this in New Zealand would be DPS. This approach will typically charge transaction fees based on the volume of transactions processed each month on a sliding scale. See more on fees later in this chapter.

Aggregator Account

An aggregator account is the second type of merchant account. Think of these accounts as a shared resource for a range of companies utilising the service. Rather than your bank processing payments on your behalf (and taking on the risk), the aggregator does it instead. A well known example is PayPal.

Aggregator accounts are often very appealing to smaller companies and start ups as they are far easier and faster to set up than dedicated accounts.
You have far less control over your money with an aggregated service particularly with regards to how long pay-outs can take (often 5 working days plus). Also, the simplicity they offer typically comes at a cost although many of the aggregators also streamline their fees (PayPal operates at a flat per-transaction rate with no monthly fees).

If your online business only processes a few hundred transactions per month, you might want to consider this option. It is lightweight, easy to set up and get running and, while not necessarily cheaper, the fee structures are certainly simpler.

Internet Merchant Bank Account Fees

Like all services there is a fee for establishing and using Merchant accounts. The fees will vary from one bank/provider to another but watch out for these fees in particular.

Annual Fees

Most providers charge an annual maintenance fee from merchants. This can vary from one provider to another and can be anywhere from $79 - $400.

Monthly fees

Some of the fees charged are monthly fees. The statement fee is one such fee and is charged every month. Another monthly fee is the Monthly minimum fee, which is the minimum amount a merchant, will be charged irrespective of the actual processing charges.
Early termination fees

Some providers may charge a fee if a merchant terminates an account before the end of the contract term.

Merchant Service Fees (MSF)

The MSF is the fee paid to the credit card scheme providers for using their credit facility. Sometimes this fee is rolled into general transaction or account maintenance fees but it is good to check.

Other fees

There are a host of other fees that could be charged to a merchant including those for customer services, batch payments, chargebacks and transaction fees.

Other Questions to Ask About Merchant Accounts and Payment Gateways

Here are a few more questions you should have up your sleeve when it comes to getting into bed with a Internet Merchant Bank Account provider.

1. Does the gateway have a list of specific merchant account providers I have to choose from?

2. Does my gateway require a merchant account to be set up independently or will it be bundled with the gateway?

3. How long is the application process? How complicated is it?

4. What are the minimum requirements for a merchant account?

5. How much will the account cost to set up and on-going?

What is PCI Compliance?

The term ‘PCI-DSS’ stands for Payment Card Industry Data Security Standard (although it is typically abbreviated to ‘PCI’). It is a set of regulations that all companies that process, store or transmit credit card data must adhere to in order to maintain a secure transacting environment. Regardless of the size of the business or the number of transactions processed, all merchants must be PCI compliant.

How do you get compliant?

This depends on your size and set up. If your business is online only and your gateway is processing all of the payments, then the responsibility for compliance falls on the gateway provider. 

However, it is important to check with the gateway provider, particularly if you are using an integrated checkout rather than a hosted solution.

ALWAYS, ALWAYS, ALWAYS ensure that your gateway is PCI compliant. Find out more at https://www.pcisecuritystandards.org/.

What happens if you aren’t?

PCI compliance is a serious business. Payment service providers may penalize banks for not following the PCI standards. The fines could be range from $5000 to $100000 per month. The banks then transfer the fee down to the merchant who will have to bear the cost of the fine or suffer increased transaction fees to cover the losses. At the very least expect to have your merchant account terminated.

All merchants have to adhere to the standards at all times. Check your merchant account contract to see what is the extant of your exposure in case of a breach of PCI compliance.

Conclusion

Setting up a payment gateway for your website can be complicated but you can simplify the process with a little forward planning. By understanding your businesses' requirements of an online payment system in the short, medium and long term, you stand a better chance of making the right decision and saving yourself unnecessary pain.

Remember:

  1. Always ask these questions before you get into bed with a provider
  2. Understand the core features that your business needs
  3. Get your head around Merchant Internet Bank Accounts before you start (you won't be sorry!)
So, do you need any help with payment gateways? Anything we've missed? Let me know in the comments below or get in touch.

To your continued online success!

Jeff Skidmore @POLi

 

By Popular Demand POLi is Now Available on Shopify

Over the last year loads of merchants have asked us when we are going to support Shopify with our payment option that lets customers use their own Internet Banking. 

Well, we're delighted to announce our new partnership with Shopify formally starting in July 2015. So, if you’re a Shopify website owner (or are thinking about becoming one) make sure you select POLi as a payment option on your storefront. 

Want to know more? Read the post below to find out how to set up POLi in your Shopify store and how much it costs.

Already convinced? Click here to sign up now

 Click to Tweet: Shopify retailers can now use POLi in their stores. Credit cards no longer a must have!

Benefits of using POLi with Shopify

1 Get more transactions from customers who prefer to use their own money or don’t have a credit card

2 Pay less per transaction versus other payment options

3 Remove the pain of matching direct bank transfers with online banking payments

4 POLi is very easy to set up and install in your Shopify store – it’s a 2 minute job

Get more transactions through your Shopify store with POLi

POLi is a secure, effective, and user-friendly way for your customers to pay for purchases online without using a credit card. Many major companies, small businesses and untold consumers trust it every day to complete thousands of transactions.

Despite there being massive growth in online shopping in New Zealand, up to a third of adult New Zealanders don’t own (or want to use) a credit card. Even being conservative, this amounts to a decent slice of the 4.6 million residents in the country3So, by offering POLi, Shopify merchants can tap into a potential gold mine of additional sales.

Credit: www.briantracy.com

Get more sales but pay less

Shopify offers credit card payment solutions via an impressive array of payment gateways. However, payment gateways come with significant fees and a heap of hoops to jump through.

POLi is different. As you’re not dealing with credit card schemes, there are no surcharges and you only pay for completed transactions. Also, POLi doesn’t charge retailers set-up or service fees.

POLi transaction fees are only 1% of each transaction value plus GST. This is an extremely competitive rate and it’s capped at $3.00 per transaction! 

How does POLi’s costs compare?

 

Fees

 

Set up

Transaction Fee or MSF

Payment Gateway (per tx)

Monthly Service Fees

PayPal

(full solution*)

$0

3.4% + $0.45 (USD ?)

Included

$0

Credit Cards

Varies

4% - 6%

$0.15 - $0.25

$25 - $60

POLi

$0

1% (capped at $3)

Included

$0

Account2
Account

$150

1.2% (capped at $3)

Included

$25 - $60 **

Flo2cash

$150

2.75%***

Included

$30

SwipeHQ

$99

2.75%***

Included

$0

See more at about how much you should expect to pay with an online payment system.

Offer direct bank transfers online in 4 simple steps

Credit: www.patheos.com

Do you offer credit terms or direct bank transfer payment options in your Shopify store? If you do, you’ll be used to manually reconciling all those direct bank transfers – and what a pain it is! 

1 Simply set up your POLi account

2  Install POLi in your Shopify store

3 Whenever a customer chooses to pay with POLi they will be taken directly to their Online Banking to complete the transaction.

4 You receive the money and ship the goods.

How Can I Offer POLi Payments in my Shopify Store?

As a business owner, we know that your time is precious so signing up with POLi is quick and easy. We have streamlined the process into a few simple steps:

1 Apply for a POLi Merchant Account. It is far easier than the approval process with credit card companies. Click here to apply.

2 Once we have provisioned your account, we'll send you some simple instructions. Set up only takes a few minutes.

3 Log into your Shopify store and install POLi.

You don't need to be tech-savvy to start using POLi

Getting set up with POLi and installing it on your Shopify site is easy! We’ve made our processes as straightforward as possible. And, our friendly technical team is on hand to get you up and running in no time.

When you combine this with Shopify’s ethos of simplicity, POLi and Shopify really are a winning combination.

Our Shopify store owners are loving POLi

“I feel confident that the option to have POLi on our website makes us different from our competitors. I think our customers really respect that we have this option as well as they now have a quicker and easier way to pay.”

Laura, Owner & Founder, magichollow

magichollow.co.nz

A great example of POLi and Shopify in action is the retailer magichollow, an online vintage clothing store- specialising in on- trend, unique products.

Their target demographic is teenagers in the 14 – 18 year age bracket many of whom do not have a credit or debit card. This meant they had to manually reconcile most of their online sales payments which was time consuming yet vital to their business model.

So using POLi as a payment option in their store was an absolute no-brainer that has saved them time, money and offers their customers a better checkout experience.

Read the full case study here.

Are you new to Shopify?

If you’re new to Shopify and what it has to offer, here’s a quick rundown of some of the best bits.

Shopify tools

Image Credit: Shopify.co.nz

Image Credit: Shopify.co.nz

  • Track orders and manage inventory with ease from day one.
  • Easily optimise the shopping experience on any number of mobile devices.
  • Present your products in the best light with pictures, zoom function, and a photo gallery. It also adjusts its views depending on what device the customer is using to view your page.
  • Retrieve lost sales with easy to use cart abandonment. This will later notify shoppers via email that their selections are still available for purchase and waiting for them.
  • Straightforward management tools for calculating taxes and shipping rates.

How Do I Set Up My Shopify Storefront?


There are many free default ‘themes’ that can help you create a super functional and aesthetically pleasing storefront when you sign up.

These can be easily customised by adding your logo, colours, fonts, etc. Shopify Experts can help you take it to the next level by creating something unique for you and your products or services. This does cost more but can be a better deal than hiring an outside consultant to set up something similar for you.

Click here for more information about their storefront options.

So, do you want to get started?

Hopefully the benefits of using POLi in your Shopify store are clear. By offering your customers a non-credit card payment option, you could get more transactions at a lower cost and remove a ton of unwanted admin to boot!

1 Sign up for POLi now by clicking this link

2 Get in touch if you need help with anything

If you already have POLi and want to set it up on your Shopify store, read these instructions.

Until next time,

Jeff Skidmore

Director, POLi

3. http://www.stats.govt.nz/tools_and_services

POLi’s growth in the travel market gains serious momentum

Etihad Airways and POLi

Click to tweet: POLi announces partnership with Etihad Airways & Cathay Pacific.

Today’s travelers are demanding more options than ever to coordinate their holidays and business trips. In accordance with this trend, our exciting growth in the online travel industry continues to gain momentum.

Most recently, we announced partnerships with high-profile merchants using the POLi platform, Etihad Airways (the national airline of the United Arab Emirates) and Cathay Pacific. All three now offer POLi as an alternative payment solution for international travel. This is in addition to our already impressive list of clients that includes airline giants Air New Zealand, Virgin, Jet Star and Air Asia.

Why do airlines use POLi?

Airlines love using POLi because it provides their customers with the option of a direct bank transfer when making reservations online. We know that over 40% of our customer base own a credit card, but there remains a strong preference for the convenience of a direct bank transfer. For a variety of reasons many favour this method over a credit card transaction.

Additionally, POLi provides a secure and reliable purchase option for those who don’t hold a credit card. This way, all customers are able to take advantage of pricing differentials for online purchases.

Offering reliable online payments nationwide

Now you can travel all of New Zealand using POLi’s convenient and safe payment system. You can even use POLi for travel on InterCity, Naked Bus and the Interislander.

InterCity is a perfect example of how POLi is proving itself almost instantly. When they launched the new system in September 2010 customers began using the bank transfer option within the first few minutes of it going live. InterCity has continued to experience growth with POLi with bank transfer transactions up 30% year on year.

We’re growing in lots of other sectors too

Growth for POLi is not isolated to the travel industry. We have experienced a notable lift of 52% in overall customer transactions FY13 to FY14. Additionally, POLi had significant growth in their number of merchants by 83% during the same period.

We’ve been fortunate to have loyal early adopters to POLi that have stayed with us. Now we’re beginning to see the rewards of our earlier years paying off. Every day more merchants and consumers are choosing the convenience of direct real-time bank transfers when shopping online.

POLi’s solutions are one of the best in the market. It is not only easy to use, but it also broadens the appeal of online shopping to a wider demographic than just those that have a credit card.

For Media Enquiries Contact:

Jeff Skidmore,

POLi, Payments

+ 64 21 485318

jeff.skidmore@polipay.co.nz

Visit: polipay.co.nz for more information

Follow POLi

On Linkedin: www.linkedin.com/company/polipay

On Twitter: twitter.com/POLipay

Top 8 Methods for Accepting Online Payments in New Zealand

 

There are numerous reasons why eCommerce continues to grow in popularity. New Zealand was, for a while, lagging behind the rest of the western world, but this is no longer the case.

In December 2014, there was a 12 per cent rise from the previous year in online spending in New Zealand. The most desirable online categories for online shoppers were, respectively, food and entertainment, books and newspapers, and computers & peripherals categories.

Entrepreneurs are taking notice of the Kiwis’ positive outlook on online shopping, and are rushing to meet this demand. One of the most important decisions you as an online retailer need to make is deciding on what payment options to offer your customers.

Tweet: Tweet: “New Zealand’s Top online payment systems” @POLi – Click to Tweet

 

This post will walk you through the three main areas to consider when choosing an online payment method for your business as well as the top 8 services in New Zealand.

Don’t leave this decision until the last minute

The biggest mistake many new business owners make is to put off making a decision about which online payment solution to use until the last minute. You need to think about this topic before your website is anywhere close to being launched as it can take a long time to get the facilities you need in place. 

Also, when it comes to accepting credit cards your bank may not be willing to give you a facility for online payments at all.

Two big things you need to consider

1. How will your customers want to pay for your products or services?

It’s important to think about the kind of people you wish to target. Consumers have different levels of comfort with shopping online particularly when it comes to paying for things.

Some people are accustomed to shopping online; they’re used to using a credit card to buy things. Others are happier to pay via bank transfer (a behaviour heavily influenced by being brought up on Trade Me).

Then of course there is the issue of accessibility to different payment methods (50% of New Zealanders don’t even own a credit card). So, to avoid missing out on a lot of potential custom, it’s very important to ensure you offer a range of payment methods that cover both credit and debit options.

People want to choose how they pay. The retailers who offer them this choice stand to win.

2. What overall options do you have?

Broadly speaking, your options include accepting credit card payments via a payment gateway, credit card payments via Paypal and payments direct from your customers’ bank accounts. It can feel like the options are endless - scheme credit and debit, direct bank transfer, gift cards, prepaid cards, offline Internet Banking, qcard, loyalty cards, Prezzy cards - but they can be categorised broadly as follows:

1.Credit Card

You will need a Merchant Account from a bank for online (card not present) transactions, and note that your bank may not be willing to give you this.  You’ll also need a relationship with a payment gateway provider  (see below) and your website will need to integrate with that provider.  
You can offer your customers a credit card option via Paypal but it’s expensive and your customers will need to be diverted to the Paypal environment.  Paypal tends to go hand in hand with eBay and therefore it’s not as popular in New Zealand as other parts of the world.

2. Bank transfer.

You could allow your customers to pay you via their Internet Banking by providing them with your bank details. The downside is, this approach is not very elegant, cart conversion will be terrible and the payment reference errors will drive you crazy.  
The two best options for New Zealand retailers are POLi and Account 2 Account. These systems both utlise the customer’s Internet Banking to enable them to make instant payments online.

3. Everything else. 

Outside of Bank transfers and credit cards, you could consider all the other card schemes – loyalty, prezzy, qcard etc. To be honest though, most NZ Retailers would consider these payment options to be pretty low down the list of priorities.

1. Credit Card & Payment Gateways

Credit Card Schemes –  there are a range of credit card schemes operating in New Zealand. The most commonly known are Visa, Mastercard, Diners and American Express.  
There are two fees that you should be aware of when considering offering credit card. Your bank will charge you a Merchant Service Fee (or MSF), typically a percentage of the transaction value – anywhere from 1 – 6%, (but likely to be around 4% for a startup business in a low risk business category), and your gateway will charge you a per transaction fee as well.

Payment Gateways – these connect all participants in a transaction together, i.e the merchant (you), the issuing bank (the bank that issued the card to your customer), the acquiring bank (your bank that issued you with a Merchant Account) and the credit card schemes.  

The common Payment Gateways in New Zealand are DPS Payment Express, Paystation, Flo2cash and IP Payments.  There are also new entrants such as Swipe that provide a complete service so you don’t need a separate relationship with a bank – i.e you get one fee per transaction that incorporates the MSF and gateway fee.  Confusing, I know!
The main New Zealand banks often have a branded Gateway offering e.g. BNZ Buyline or ANZ eGate.  Often the banks’ offering is simply while labelled from one of the Payment Gateway providers, meaning the bank uses their system but put their branding on it.

Flo2Cash

Flo2Cash provides credit card services to enable merchants in receiving their payments as easily as possible, whether it be over a landline phone, internet or your mobile phone. All transactions are processed in real time.  Like Swipe they’re able to offer a bundled service negating the need for a facility from a bank.

http://www.flo2cash.co.nz/creditCards.php

Paystation

Specialised  payment technologies development for eCommerce entrepreneurships as a Paymark Certified Solutions Provider, PayStation is there to help you find the right payment solution for you and your customers. They support internet credit card payment through the following banks: ANZ, ASB, Bank of New Zealand and Westpac. Paystation was recently purchased by Trade Me.

http://www.paystation.co.nz/cms_display.php

DPS – Payment Express

DPS is a well known credit card/payment gateway provider in New Zealand. It offers a range of services including merchant hosted and non-hosted options as well as a simple manual credit card processing facility.

https://www.paymentexpress.com

IP Payments

IP Payments offers a versatile service, and empowers you to handle any kind of payment. You can handle real-time transactions, batch payments, even recurring transactions. It is always good to give your customers the option to use their phone to complete payments and order products or services. Every third New Zealander owns a smartphone, and it would be purely illogical to ignore this market which is only going to get bigger.

http://www.ippayments.com/

SecurePayTech

SecurePayTech.com provides secure and affordable credit card authorization and processing services for on-line businesses. Comprehensive reporting of individual transactions combined with historical trend analysis keeps you firmly in control of your business.

http://www.securepaytech.com/

PayPal

The alternative way to offer your customers credit card payment options is via Paypal.

Many small startups go down this path first - particularly if they can’t get a Merchant Account from a bank or want a low cost entry into the market.  Although, it is pretty easy to get started on Paypal, the transaction fees are high which can eat into your profit margins pretty quickly

https://www.paypal.com/nz/

2. Direct Bank Transfer


POLipay

POLiPay has been allowing customers with New Zealand bank accounts to make purchases and pay without using a credit card since 2007. It offers a seamless experience delivered via the customer’s Online Banking. Simply log-in to your bank account and confirm the payment. POLiPay is extremely secure and simple to use, and above else, allows people to shop through a familiar platform - their Online Banking account. This is an attractive selling point for online shoppers and could well increase your online sales with fewer transactions dropped during checkout.

Ease of use and familiarity are great allies of eCommerce since there is still a bit of caution coming from New Zealanders when it comes to online shopping. Letting them operate from a familiar territory helps bridge this trust gap significantly.

http://www.polipay.co.nz/

DPS Payment Express Account to Account

Payment Express Account2Account offers a similar service to POLipay but has only been in the market since 2014 and therefore this service and brand hasn’t been exposed to as many consumers as POLi. Payment Express charge’s monthly fees so take this into consideration if you’re not going to use them as your credit card payment gateway.

http://www.paymentexpress.co.nz/Products/Ecommerce/Account2Account

Choose an online payment solution wisely

There is a lot to consider when it comes to choosing the perfect online payment method for your online business. Depending on which segment of the market you want to target, your long-term business plans, the state of your finances as well as your functionality preferences, what is ‘ideal’ may vary.

All of the above mentioned solutions are reliable and tested, but it is up to you to make the final call when it comes to picking the one that works for you. Finding that ideal fit when it comes to payment methods is something you can’t get any other way.

We hope this list helped you make the right decision.

What are your thoughts on the best online payment methods in New Zealand? Let me know in the comments below!

Until next time!

Jeff Skidmore
Director, POLi

How much do online payment systems cost?

 
 

Note – obviously, we have a vested interest in POLi (it’s our service) but we have tried to make this post impartial
 
 Tweet: “Using the right online payment system could save you money” @POLi – Click to Tweet

For a small country, New Zealand still represents a huge potential market in the world of e-commerce. Between 2001 and 2010 the uptake of online shopping by New Zealanders grew from 21% to 57% of the population. By 2011 63% of the population had purchased something online, amounting to approximately NZD $2.68 billion in sales.

As merchants of all shapes and sizes continue to embrace the online market place, utilising ecommerce store development solutions such as Shopify, Magento, Opencart and more it’s essential that Merchants offer their customers a range of convenient and secure  online payment options.

However, payment systems do have a cost associated so it is very important that merchants evaluate their options carefully.

This post will compare the fees for Paypal, POLi and Account2Account.
 

What are the options?

Broadly speaking, your options include accepting:

1. credit card payments via a bank;
2. credit card payments via a payment gateway;
3. credit card payments via Paypal;
4. debit payments direct from your customers’ bank accounts.

Note that when we say credit card we include scheme debit (i.e Visa Debit). For a full breakdown of the online payment options available in New Zealand, read this blog post.

Currently there are over 1million people in New Zealand who do not have a credit card, which immediately excludes them from using any payment system that requires one. Also, either through preference or circumstance many people with a credit card will use a debit option if given the choice.

However, there are also as many people who do have a credit card and, with the success of the many rewards programs out there, want to use it.

The upshot is, that if merchants want to entice customers to part with their dollars, they must provide a range of payment options. And understanding the costs associated with each option is critical.

Comparing the options


Debit Options

Poli payments

POLi allows you as a merchant to offer your customers an alternative payment option to credit cards. With POLi, your customer can pay online directly from their bank account via Internet Banking using a secure process.

POLi also has lowest fees of all the options presented in this article.

Account 2 Account

Payment Express Account2Account offers a similar service to POLipay but has only been in the market since 2014 and therefore this service and brand hasn’t been exposed to as many consumers as POLi.
 
Payment Express charge’s monthly fees so take this into consideration if you’re not going to use them as your credit card payment gateway.

Credit Options

PayPal

PayPal is extremely well known, but the uptake in New Zealand has been lower than in other countries (perhaps due to its tie with eBay which is not available on these shores).

The system allows customers to pay securely for items using a credit card without having to provide any bank or card details to the merchant. The merchant can choose to have a fully integrated system (transaction takes place within their ecommerce site) or divert the customer to PayPal’s site to complete the sale.

PayPal is often seen as being an easy entry to market for small businesses and startups but transaction fees are particularly high.

Credit Card Schemes –  there is a range of credit card schemes operating in New Zealand. The schemes most commonly known are Visa, Mastercard, Diners and American Express. Part of the contract which allows you to receive payment via a credit card scheme, is a Merchant Service Fee (or MSF) typically a percentage of the transaction value – anywhere from 1 – 6%, (but likely to be around 4% for a startup business in a low risk business category).

Credit Card via a bank

Traditionally, to offer credit card payments you need a facility called a Merchant Account with your bank and a relationship with a payment gateway (see below). The bank will charge you a Merchant Service Fee and the gateway will typically charge you a flat fee per transaction.

Some banks can offer you a bundled service that includes the payment gateway service.

Credit Card via Payment Gateway

Payment Gateways – these connect all participants in a transaction together, i.e the merchant (you) the issuing bank (the bank that issued the card to your customer) the acquiring bank (your bank that issued you with a Merchant Account) and the credit card schemes.
 
The common Payment Gateways in New Zealand are DPS Payment Express, Paystation, Flo2cash and IP Payments.

(The main New Zealand banks often have a branded Gateway offering e.g. BNZ Buyline or ANZ eGate.  Often the banks’ offering is simply while labelled from one of the Payment Gateway providers, meaning the bank uses their system but put their branding on it.)

For a list of the main payment gateways in New Zealand, check out our forthcoming post.

Two gateway companies in New Zealand offer a bundled service that means you don’t need a Merchant Account with a bank in order to process credit card transactions. They are Flo2cash and SwipeHQ. The fees are quite high, but it can be a good option if you can’t get a merchant facility from your bank. 

What is the difference in fees?

 

 

Fees

 

Set up

Transaction Fee or MSF

Payment Gateway (per tx)

Monthly Service Fees

PayPal

(full solution*)

$0

3.4% + $0.45 (USD ?)

Included

$0

Credit Cards

Varies

4% - 6%

$0.15 - $0.25

$25 - $60

POLi

$0

1% (capped at $3)

Included

$0

Account2
Account

$150

1.2% (capped at $3)

Included

$25 - $60 **

Flo2cash

$150

2.75%***

Included

$30

SwipeHQ

$99

2.75%***

Included

$0

* This illustration is for PayPal’s fully hosted solution.
** Not charged separately if also processing credit card transactions
*** Visa and MasterCard

Note - Figures shown do not include any applicable GST.

Case study illustration

Case Study: start up store, $10k sales per year, 10 transactions per month, av. sale price of $80.

John has recently set up a small start up NZ niche online store and he is now looking for an online payment system. To date, he has been selling his products via Trade Me and he knows many of his customers do not have a credit card.

Therefore, he wants the flexibility to offer his customers both credit card and direct bank transfer payment methods.

Let’s assume half of his sales transactions are completed with a credit card and half via direct transfer of funds.

Using the PayPal service, he will spend $202 on transaction fees, but this includes the fees he would otherwise have had to pay for the Credit Card Scheme Merchant Service Fees (MSF) and payment gateway fees.

If he also uses POLi he will pay an additional $50 in transaction fees but there is no set up fee. So, a total of $252 in the first year.

If he opts instead to use Account2Account, he will pay an additional $150 for set up and $60 in transaction fees. So, a total of $412 for the year.

Do the maths before your commit to an online payment solution

Merchants will have different online payment needs at different stages of their store’s life. Before you jump into bed with a particular solution provider, think about your business growth plans. In the example above, although a little simplistic, shows that the POLi + PayPal option would cost John 2.52% of total revenue in the first year. This is compared to 4.12% using A2A + PayPal.

A 1.6% difference might not sound like a lot but if John were to triple his revenue by year three, he would be paying nearly $500 a year more.

It’s worth thinking about.

What do you think? We would love to hear from you with any questions or comments about your own experiences with online payment systems.

Until next time.

Jeff Skidmore

Director, POLi