E-commerce, Payment Gateways and SSL

Running an e-commerce website can be a daunting task. Zoom Digital’s explanations will help you fit the pieces together and get your e-commerce website up and running in no time.

What is Paypal

PayPal is a third party service that allows businesses and online merchants to pay, send money, accept payments online without the need for a payment gateway. PayPal's service is secure and protected by SSL to ensure that all sensitive data is protected.

How does PayPal work?
To start using PayPal to accept payments on your website you first require a PayPal account. Sign up for a standard business PayPal account is free. Once you have an account created there are multiple ways PayPal can be integrated into your website.

Once PayPal has been integrated into your website customers can start making payments to you using the PayPal interface. The basic set up looks like:

1. Customers choose a product or service from your website.
2. The checkout process is completed on your website, for example all address details and personal information is entered on your website.
3. At the final payment page customers can choose to pay via PayPal.
4. With the free PayPal account customers are then redirected to paypal.com where they re-enter some personal details and can make payment either via credit card, or if they have a PayPal account themselves via PayPal credit.
5. Once payment is completed customers are redirected back to your website.

What are the pros and cons of PayPal?
PayPal offers an easy way to start accepting payments online without the need for a payment gateway or hosted payment page. However there are a few disadvantages of using PayPal as your payment processing facility.

1. Customers are redirected from your website to PayPal to make payment. This results in an additional step in the checkout process.
2. Often personal details will need to be re-entered resulting in customers having to enter their details twice - this make the checkout process slower.
3. PayPal takes a small percentage of each transaction completed via their service. The amount they take is dependent on the volume of sales that are processes through PayPal.

On the flip side to this, PayPal does have some advantages and it's often a good idea to offer PayPal as an alternative payment method for customers.

1. PayPal is a well known payment service - they are trusted and well known by a lot of online shoppers meaning that there is little to no reluctance to use the service.
2. PayPal offers a highly secure service. Due to the massive amount of transactions processed and the sensitive nature of the data PayPal deal with only the highest level of security is appropriate.
3. PayPal is easy to set up and easy for customers to use. Once a customer has a PayPal account they can easily use this for multiple e-commerce websites, making their online shopping experience very efficient.

What is Payment Gateways

Online payments are made thousands of times a second all over the world. There are hundreds of different ways these payments are made, including PayPal and EFT transactions but a large proportional are based on payment gateway technology. A payment gateway allows a connection directly between a website and a bank, meaning that payments can be placed directly on a website and deposited straight into a bank account.

A payment gateway is a server that is dedicated to linking websites and banks so that online credit card transactions can be completed in real-time.

How does a payment gateway work?
Payment gateways work by providing the secure, integral link between a website (web server) and the bank. When credit card details are submitted on a website the payment gateway receives these details and sends them to the bank for verification. The bank then replies with a response; usually either accepted or declined. The payment gateway then sends this response back to the web server when the appropriate message is displayed to the user - for example "Your payment has been successful".

What is required for a payment gateway?
If you are looking at accepting real-time credit cards on your website then a payment gateway is required. There are three main requirements for a payment gateway to work:

• A website that meets the security and eligibility requirements for the bank to issue a merchant account
• A merchant account from a bank. A merchant account is a special kind of bank account that can be linked directly to a payment gateway. These bank accounts are issued only upon review of a website to ensure it meets privacy and security requirements. Requirements often include an SSL certificate and a privacy policy.
• A payment gateway provider. Payment gateway providers offer the server that acts as the link between your website and the bank. The server has a very special configuration and a very high level of security due to the sensitive nature of the data being transferred.

Once all three requirements are met, the payment gateway then needs to be connected to the website and to the merchant account. This will then allow for real-time credit card processing.

What are the benefits?
By incorporating a payment gateway into your e-commerce website you can ensure you are providing the easiest and most streamlined buying experience for your customers. The easier it is to buy from your online store the more likely visitors are to purchase.

A payment gateway is beneficial for a few reasons:
Visitors stay on site:
 Many websites will take advantage of third party or hosted payment processing facilities such as PayPal. These facilities do work well and can provide secure payment options, however they do have draw backs. A major advantage of using a payment gateway is that customers will not leave your website to make payment. All user information and credit card details are inputted on your website meaning fewer steps for the buyer. Further to this, re-directing users to a separate website for payment often leads to mistrust and payment abandonments.

Real time transactions and payments: Utilizing a payment gateway allows you to accept credit cards directly on your website, but also means that these credit card transactions are processed in real-time. Real-time transactions mean that you as the merchant get paid immediately and that the customers get instant feedback as to whether their payment has been accepted or declined.

Saves time and reduces administration: A payment gateway saves time with the fact that credit cards are processed in real-time and funds are deposited directly into a merchant account. A payment gateway removes the need for manual card processing or third party account consolidation.

What is Secure Socket Layer

When you send and receive information on the internet (submitting online forms, posting messages on websites) it is often insecure - data transmitted is un-encrypted and sent "as is". This means that during transmission of this data it can be intercepted maliciously and the data used in any way.

SSL is a way of encrypting data sent over the internet. This means that before the data is sent it is encrypted in a way that makes it unreadable if intercepted. When it comes to sensitive information such as personal details, usernames and passwords or credit card details the use of SSL is imperative. Ensuring that sensitive data is encrypted using SSL makes it virtually impossible for it to be stolen and used without your consent. Once the information reaches its destination it can then be decrypted and read as normal.

Secure Sockets Layer technology requires the use of an SSL certificate. SSL certificates are granted by certified providers on a per domain name basis. SSL certificates are usually incorporated into e-commerce websites to protect credit card details and user data, but are also found where personal details or usernames and passwords need to be entered.

The technical side of SSL involves complex cryptography to encrypt the data before being sent and decrypt the data on arrival.

What is E-commerce

By definition e-commerce refers to businesses and consumers buying and selling products online. The majority of e-commerce websites on the internet are retail stores selling products directly to the public. However there are also a proportion of online stores dedicated to business-to-business (B2B) sales or wholesale activity. E-commerce does not only refer to the selling of physical products, it can also refer to the selling of services where payments for the services are made online. As a general rule an e-commerce website is a website where a transfer of funds is completed electronically - hence e-commerce.

How does e-commerce work?
Because there are hundreds of different products and services for consumers and the multitude of different ways these products and services can be delivered, e-commerce by its nature is varied in the way it works. In its most basic form e-commerce works as follows:

1. Consumers choose a product or service on a website
2. Consumers pay electronically on the website (online credit card transactions) or using a third party payment provider such as PayPal
3. The business owner or merchant receives the order and payment and the order is fulfilled (delivered by post, booked in for services etc)

Making payments online is completed via a secure connection to ensure that sensitive data such as credit card details and personal information are kept private.

What are the benefits of e-commerce to the consumer?
Over the past decade e-commerce has become the preferred method of shopping for a large number of consumers. Online shopping provides a vast array of benefits to the consumer that is otherwise unavailable in standard brick and mortar stores.

Quick, easy and convenient: E-commerce has enabled the consumer to complete transactions from the comfort of their own home, transactions that would usually happen within the walls of a store. Transactions now take only minutes, rather than the hours included in physically getting to the stores.

Product comparisons: Not only are consumers finding it quick and more convenient to shop online but they are also making more comparisons than ever. Comparing the price, delivery time and product specifications have never been simpler. Quickly browsing multi websites that stock products that suite your criteria is as simple as a Google search - consumers can now compare multiple products in minutes.

Lower prices: Many consumers are turning to e-commerce for their needs due to the lower price for many everyday items. Different factors on the merchant's side of the equation allow them to sell products at a lower price compared to a standard store and these cost savings are often passed to the end consumer.

What are the benefits of e-commerce to the merchant?

Reduced costs: End consumers are treated to lower prices and this is all due to reduced costs for the merchant. Online retailing requires no sales staff, hence a reduced labour cost. Electronic payments which are often automatically tracked and linked to accounting software results in reduced paper work and reduced errors in data entry. Costs involved the maintenance of a physical storefront are also removed, with the major cost of e-commerce going to warehousing and product storage.

Shorter time frames: E-commerce allows for highly reduces lead times, as well as the more efficient delivery of products.

Increased consumer reach: E-commerce allows online merchants to stock a larger product range than a traditional store. This larger product range means more products are suited to a larger consumer base and hence greater possible reach. E-commerce stores are also available from anywhere, interstate and international customers are no longer a missed segment - this results in a massively increase possible consumer base.