What Do You Need When Accepting Cards Online?

Accepting cards online is relatively simple, you just need to put together a few basic building blocks, in addition to the obvious website and a business bank account.

You need the following

1. Shopping cart / e-Shopfront

Acts as a virtual shopfront, shopping cart, catalogue and ordering system.  Enables the customer to select the goods they want to buy (an online version of a shopping basket).  When the customer “checks-out” the shopping cart generates a “purchase description” and tells the payment gateway the amount payable.  The shopping cart can be a tailor-made solution by a web developer or, more commonly, your website is integrated with an ‘off the shelf’ solution which will provide you with ready-made templates.

There are numerous off the shelf solutions available including ekmPowershop,  Volusion, Shopify, Shopcreator, 1 & 1.

2. Payment Gateway 

Offers you the ability to accept a range of payment types.  It securely collects the customers payment details via a payment page connected to the website and sends the online payments for authorisation.  For Visa/Mastercard this authorisation is routed to the card issuer via an acquiring bank and a card scheme (other payment types will work differently).  You can customise the payment page to fit your site (branding, logo, etc).

There are numerous providers available including Sagepay, NetBanx, Secure Trading and WorldPay.

3.  Internet Merchant Account (“IMA”)

A type of bank account which only accepts online settlement funds (similar to a face to face merchant account).  This can be source separately from the payment gateway but frequently merchants will source the IMA from their gateway supplier – this can be an expensive route as most gateway providers and banks charge premium rates for the IMA.  An ISO (independent sales organisation such as our partners) will source an IMA at rates only marginally higher than a face to face merchant account, even if you do not arrange your payment gateway through them.

What are typical costs?

The internet merchant account represents the largest component of your online costs :

1. Shopping cart / e-Shopfront

Hosted off the shelf solutions are not expensive starting at c.£15 (+VAT) per month.  Cost increases as you add more products and features (eg unlimited product categories).

2. Payment Gateways

Starting at c.£20 per month, including a number of free transactions, usually c.300 per month.  Additional transactions thereafter cost c.10p per transaction.  High volume large corporate merchants can secure rates as low as 5p per transaction.

3. Internet Merchant Account

If you are trading as little as £1,000 per month, then the internet merchant account is more expensive than the shopping cart or the payment gateway, so when it comes to costs then this is the part to focus on.   We find that sourcing the IMA through the payment gateway supplier is an expensive option with costs of up to 2.95% of transaction value plus 20p per transaction, which is not dis-similar to PayPal’s card acceptance costs.  An IMA sourced from an ISO will typically only cost 0.2% – 0.3% more for credit cards then the face to face rate, so somewhere around 1.5%.  You will struggle to find a rate as low as this available from a bank or a payment gateway, yet the processing of your transactions is done by the same acquiring bank regardless of whether your internet merchant account is provided by an ISO or a payment gateway or the bank itself!


  1. Internet Merchant Account are commodities – there is little/no product differentiation in internet merchant accounts and it is invisible to your customers, so cost is key.  Be sure to consider any deferred settlement time.
  2. Integration – unless you want to go down the tailor-made route, make sure the building blocks are already integrated and work together seamlessly.  Most payment gateways are already integrated/compatible with most shopping carts and most internet merchant accounts but do check this is the case.  All payment gateway Providers will provide simple, easy to follow integration instructions – usually no more than checking communication links are working.
  3. Functionality – this is basic but do check that the shopping cart and payment gateway offer the specific functions you require.  For example a tick-box if delivery address and card address are the same.
  4. Payment Types –payment gateways may offer a multitude of Payment Types from across the world; there are hundreds of different online payment types.  Consider the needs of your customers – if you are only selling domestically in the UK a basic service providing Mastercard, Visa and PayPal will cater for over 99% of your customers.  If you are selling further afield, consider the additional payment types used in those countries.
  5. Pick a gateway that’s established a reputation – the whole point of setting up a merchant account is for convenience and reliability. So it makes sense to choose a gateway that has already processed payments for thousands of merchant accounts.
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