Guide toOnline Payments.Everything you need to know aboutpayments to grow your business online.

Guide to online payments. The global COVID-19 pandemic is the biggest challenge facing businesses in living memory, but some companies are rising to the challenge by changing their tradingpractices. Following the closure of bricks-and-mortar retail premises as a result of lockdown, savvy businesses are increasing their sales channels by selling online, or over the phone, adapting their product by offering customers new means of making apurchase. As a result, employers and staff, who feared months of worry and financialuncertainty, are weathering the storm by coming up with new means of marketing and selling their products to consumers. Even small and medium-sized enterprises are now taking their business online to keep afloat and meet customer demand.

How has COVID-19 impacted UK consumer spending habits? Consumer research carried out in March by The Drum has led to predictions that businesses will spend an additional 17.7% on eCommerce advertising and 22.2% on social media spending. These figures reflect how consumer behaviour is changing, with more people buying online, rather than offline. As consumers are spending more time at home, brands are responding by offering more online services. In China, where the coronavirus outbreak began, onlinespending has accelerated seven times as fast as analysts would expect for normal year-on-year increases. Analysts are confident the statistics in the UK will trend towards the figures seen in other countries where COVID-19 is more advanced. In the United States, 74.6% of respondents surveyed in mid-March said they were avoiding shopping centres in favour of online shopping.

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What should businesses consider at this stage? There are certain considerations for businesses looking to go online and for those who already have an online presence but wish to expand in light of COVID-19. Being able to process online payments quickly, safely, and efficiently is the most importantchallenge. The retail market is changing rapidly and displaying unprecedented characteristics, with some sectors suffering, while others have felt the benefits. Most companies have found that having an online presence is a must. If you already have an online pres-ence but don’t currently take payments, look for an appropriate eCommerceplatform to create your online store, with products and shopping carts. If you're a newcomer to online shopping and payments, seek advice from aprofessional payment provider. It can seem a daunting task if you're a small business owner with little or no online experience, but you must get up to speed quickly to meet the demands of the current trading climate.

Research by IMRG for the week commencing 15th March 2020 revealed UK eCommerce sales for health and beauty products grew by 31.6% year-on-year. Online sales of electrical products surged by 42.4% for the same period. However, online clothing sales dropped by 26.7% year-on-year, a statistic attributed to consumers prioritising essential purchases and cutting down on luxuries. Grocery stores have seen an increase of 20% on their average transaction as consumers stock-pile food in anticipation of having to self-isolate at home.

A study by Poq pointed to a surge in retail app usage, with consumersflocking to shop online over the weekend beginning Friday 27th March.Retail app downloads reached their second-highest peak, thehighest being on Black Friday in November 2019.

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42

.4%

26

.7%

What are online payments? To join the growing number of businesses sellingthrough eCommerce sites, newcomers must setup a reliable platform to accept online payments.To be successful in online selling you must ensurethat customers can pay for products and servicesusing their preferred choice of payment such asvia a website, on their laptop, via their mobilephone, landline phone, iPad, or tablet. A survey of online sales for 300 retailers in the UK has been carried out by IMRG, which reveals that for the week commencing 22nd March 2020, overall online traffic increased massively. Daily traffic was boosted by 15% in comparison to the figures for February. There has been an average increase in online sales of 20% worldwide, with bigger increases for medicines, essential items, and services that customers would normally buy in person. Other sectors to benefit from a boost in online sales include sports equipment, electrical items, gardening tools, children's toys, pet food, and alcohol.

How can you take payments online? There are many online payment options, such as paying on a website through an online basket and checkout, or virtual payments via telephone, email, QR, or text. Both types of payments have benefits for small businesses. Payments online via an eCommerce platform is a popular means of processingpayments. Customers will "carry out" their purchases through your website's shopping cart. This will connect to your secure payment gateway via plugins.

Small businesses need to set up secure methods of online payments for customers, so they don't get left behind by the bigger retail outlets during these challenging times. Don't be intimidated by this. A good payment provider will talk you through thisprocess.

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AVERAGE INCREASEIN ONLINE SALES OF

20%WORLDWIDE

How a shopping cart facilitates payments. The shopping cart is the software used by eCommerce platforms to help customersto make purchases online. The software facilitates the purchase of yourproducts or services, accepting the customer's payment. A shoppingcart bridges the gap between shopping and buying, so havingthe best software is a must for your website. When customers reach the checkout, the softwarecalculates the order total, including the price of thegoods and shipping costs, using the parametersthat the business owner has previously set.

What is a merchant account? To process the payments, thewebsite owner also requiresa merchant account, whichis a type of bank accountthat enables businesses toaccept payments indifferent ways - commonlythrough credit and debitcards. The merchant account isestablished through anagreement between thetrader and the acquiringbank to settle payment cardtransactions.

It is the intermediary between thedifferent parts of the card paymentprocess, ensuring the money istransferred safely and securely from thecustomer's payment card to the business'sbank account. It is not a typical bank account and the merchantcan't access it directly. It comes with a contract, cardprocessing fees, and other costs and in return offers thebusiness a unique merchant ID and an extra level ofsecurity for customers' card payments. Your payment providerwill be able to discuss how to set up a merchant account if youdo not already have one.

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What is a payment gateway? When you're planning to sell online, you will require a payment gateway as part of your payment system, enabling customers to securely process their card payments on your website. The payment gateway will encrypt, forward, and authorise cardpayments whether that’s online, over the phone, or face-to-face. You won't need your own payment gateway. Your payment provider will have a gateway that you can use. The gateway will reject payments deemed illegitimate and will authorise payments deemed "safe". To complete an online sale, both a merchant account and apayment gateway must be provided by the seller. When the shopper checks out through the business's online shopping cart, it links up with the payment gateway. Essentially, this performs the same functions as a point-of-sale machine in a bricks-and-mortar store. When the payment is approved, the transaction moves from the payment gateway to the merchant account. It is packaged in such a way that it can be submitted to the merchant bank, also known as the acquiring bank. From here, the money is transferred to the business's bank account. Without apayment gateway that is compatible with the shopping account and merchant account, your business won't be able to accept online payments on youreCommerce site. After you choose a service provider, you will be able to complete the set-upof the payment gateway, shopping cart, and merchant account to getyour online payment system up and running. One factor to considerat this stage is your payment provider’s settlement time.

To maintain cash flow, aquick settlement timeof 24-48 hours isessential.

24 - 48HOURS

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How will customers pay me online? Most eCommerce shopping sites will enable customers to pay by debit or credit cards. Some will also accept additional payments through PayPal, Apple Pay and others by adding an online checkout on their website. The important thing is ensuring your eCommerce site is accessible for all by accepting payments from all major credit and debit cards. When the economic climate is challenging and trading conditions tough, a savvy online retailer will understand the importance of having no barriers for customers. Being able to seamlessly accept major payment methods is key, to avoid frustration at the checkout and the possible loss of a sale.

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What is a virtual terminal? A virtual terminal is a secure web page in your internet browser where you canprocess card payments online. It is known as “virtual” because it has the samefunction as a credit card terminal, but using a non-physical software application, instead of a physical terminal. The virtual terminal is usually accessed through a web page by the business owner while logged in to their payment provider’s online account. They can process the payment by manually entering the customer’s debit or credit card details, which may be provided over the phone, on a mail order form, or through a secure online chat. The customer’s card is then charged, and the money is transferred to the business owner's payment provider account or bank account. The processing fees will be deducted from the final total. This is known as a MOTO (Mail Order Telephone Order) payment, the name given to a debit or credit card payment taken via telephone, through the mail, fax, or email.

What are the benefits of using online and telephone payments? Secure and efficient.

Whether you have a payment gateway with an online basket and checkout, or a virtual payment system, both have major benefits for the small business. Using anonline checkout solution enables the business to offer a secure and efficientcheckout page design that is easy for the customers to use. The payment gateway agreement reassures customers that it is a safe and secure method of payment, therefore encouraging more customers to submit their card details. People are naturally cautious about giving their payment details to anyone, as online fraud is a real concern, so security is highly important.

Seamlessly integrated payments. The checkout also offers different payment options. With everything integratedseamlessly, the payment goes through quickly and without hassle. It is reliable and secure so that both the eCommerce site and the customers have no concernsabout using it. Virtual payments are instantaneous and by using the appropriate data securityand fraud detection, traders can drastically reduce any unnecessary exposureto risks. Paperless processing limits fraud, as the payments are stored securelyin a virtual environment.

Increase sales opportunities and reduce overheads.

In the case of virtual payments, even small businesses canbenefit by interacting with customers anywhere in the world,transforming a small bricks-and-mortar establishment into aglobal eCommerce store that can competeinternationally.

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Choosing an online payment acceptance solution for your business will not only save you money but also time, especially if you are looking to improve your existingpayment process and keep pace with competitors during these particularlychallenging trading conditions. According to Finextra, the costs associated withtraditional paper-based billing such as postage, printing, storage, admin, etc is around 9.5% of the total amount collected. Costs associated with online payments are significantly less and enable you to market your business to a much bigger, global audience.

Improve cash flow.

For small and mid-sized businesses, the current economic climate is especially tough in terms of cash flow, therefore receiving payments online can help merchants receive their money more quickly. Having an online presence also means that you can be open 24/7. Customers can browse your shop at a time convenient to them rather than around your “bricks and mortar” trading hours.

Increase your average transaction value.

Online payments can also facilitate business growth as you have the opportunity for your customers to spend more. If you create an online platform that encourages visitors to browse, the likelihood is that your customers will make impulse purchases.

According to an article published by Optimonster, if you thought mobile shopping wasn’t a big deal, you’d be interested to know that 67% of users admit to window shopping for fun on their smartphones.

Not only that, but 77% of these digital window shoppers make impulse purchases. And, if you couldn’t catch them right away, 70% of them will come back and make a purchase from their device within the first hour of seeing the product.

Also, Whistl.co.uk stated in their research report that the average UK consumer spends £47.84 per month on spontaneous purchases. Across the UK that’s £3 billion a month on impulse buys.

If you are already accepting online payments and are wondering why you haven’t seen a share of this lucrative market, improving your SEO could be your first step in helping you catch those spontaneous shoppers.

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67%OF USERS DIGITALWINDOW SHOP ON

SMARTPHONES

77%OF THESE WINDOWSHOPPERS MAKE

IMPULSE PURCHASES

70%WILL RETURN AND

MAKE A PURCHASEWITHIN AN HOUR

What are the costs? Costs for an E-commerce gateway.

For businesses that don't operate in a face-to-faceenvironment and have customers paying by card over thephone, or via a website, an e-com gateway is the best option. The fees for the gateway comprise two elements: a monthly fee and an additional gateway transaction fee, applied per transaction. This is sometimes known as a "click fee".

Costs for a virtual terminal.

A virtual terminal allows businesses to take MOTO payments remotely on anycomputer using a secure web page. The costs for this service are similar to those of an online gateway in that there is a fixed monthly fee and a per transaction charge for the virtual terminal. A virtual terminal is ideal in a call centre type environment, where each operator can have a separate log in. However not all customers need a virtual terminal, some chose to key transactions via their existing physical POS without incurring any additional costs.

How to save costs.

Businesses who don't need a physical device will benefit from an e-com gateway or virtual terminal. The costs would apply to the e-com virtual payment gateway. A small number of businesses want both options, although these are in a minority. When a merchant does require a physical device to accept MOTO payments, there are costs for the POS device.

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Meet customer demand.

The biggest reason to get online is that the British public,especially in the current climate, wants and needs toshop online. By taking the necessary steps to transitionyour business online now, you are future proofingyour business. The popularity of online shoppinghas been growing rapidly, however, Covid-19has certainly accelerated that process.Therefore, with all your competitors goingonline, can you afford not to offer onlinepayments?

How are the fees applied?

Various fees are applied to the merchant when accepting cards. The first group of fees are known as the "processing fees" and include the Merchant Service Charge (MSC), the transaction or authorisation fee, the payment fee, and the chargeback fee. The second group of fees is the "equipment fees" and includes the monthly terminal charge - which is typically leased - the gateway monthly charge and the gateway transaction charge. All customers are set up with the fees in the first group. However, while a chargeback fee is set, it applies only if a chargeback occurs. It is the card processing equivalent of a "bounced" cheque. A payment fee is set if the business wants the money in its bank account quicker than the standard payment cycle. The rates for the MSC are set individually, based on the customer’s trading profile. Each different type of card has a different rate. A monthly PCI fee covers the running of the PCI service. To process payments, your payment provider needs to know how you want payments processed. In a retail environment, this is typically via a physical terminal. As thebusiness grows, you may then use some form of EPOS device incorporated into your till system. In these circumstances, you will typically lease a terminal, rather than rent, paying a monthly fee. This is negotiable, depending on the type of device used, such asa desktop, portable, or mobile device. The terminals can complete CardNot Present - CNP - or MOTO transactions by keying in the card number.

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What’s next for my business? Differentiate your product offering.

In summary, if you're planning to trade in the current challenging climate, it’s a good idea to not just consider your payment processes but also how you plan todifferentiate your business from competitors. Make your business stand out from the online crowd and put measures in place now so that when COVID-19 subsides, you'll have the ability to grow. Some businesses are already doing this, such as restaurants launching food delivery services and an increasing number of retailers going online. If you're a business owner without an online presence, now is the time to start looking into making the transition.

Enhance your customer experience.

The next step would be to enhance your customers’ experience whilst they are on your website. See it through your customers' eyes. Ask yourself the following questions: is it easy to find products on my website? Am I offering enough payment options? Is my delivery service up to scratch? Can I improve the navigation on my website? All of these considerations will help improve your basket conversions. Make sure that you have a clear online returns policy - a factor that's important to customers. Valitor’s “After Payment Emotional Experience” report covers refunds in more detail. Stay on the ball with your advertising budget and discuss strategies to maintain and gain market share. Trading online to become accessible to a wider market will help to provide stability to small and medium-sized businesses at a time when the localcommunity may not be able to use its products and services.

Considerations when choosing your online payment provider.

If this guide has convinced you that online payments are the way forward for your business, or if you are considering switching your current payment provider, below are 5 factors that you should take into consideration before making the move.

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2. Reliable Payment Technology both online and offline.

Look for a provider that can offer your business payment processing services all under one roof, so that you only require a single point of contact throughout; from quick onboarding, merchant accounts, card machines, E-commerce, and customer support. Most importantly, make sure that your provider is committed to bringing the latest payment technology to you in this fast-moving market.

3. Tailored Pricing.

Every business is different, from size, turnover, and average transaction value. Therefore, it is important to ensure that your provider offers tailored pricing to suit the needs of your business. If you are quoted prices that seem too good to be true, make sure the quote is fully transparent with no hidden charges. Always make sure you speak to a payment adviser and talk through any online quotes.

4. Faster Settlements.

Cashflow is king in the current climate, therefore it is important to understand two factors when it comes to understanding next-day settlements aka “faster payments service”. Make sure that your payment provider offers this service if required and is transparent with time frames. This service is not free, therefore find out their service charges beforehand.

5. Track Record.

Take the time to look at a company’s track record before signing up to any agreement. Find out about your provider’s experience in payments by looking at their “About Us “page, and their historic uptime. Check out their score and customer feedback on review sites such as Trustpilot.

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1. UK Customer Support.

Ensure that your payment provider is committed to providing their customers with the highest levels of support ideally with a UK-based team, who are at the end of the phone to keep your business operational 24/7.

Supporting UK businesses with their payment needs duringchallenging trading times.

Valitor provides payment acceptance solutions for small and medium-sizedbusinesses in the UK, and the Republic of Ireland. Our customers benefit from reliable payment technology, friendly UK-based customer support, and simple, tailored pricing. Our payment solutions benefit both businesses new to card acceptance and established businesses looking to improve their currentpayment processes, such as transitioning from face-to-face to online payments. With 37 years' experience in payments, Valitor offers secure and reliablepayment technology, with 99.99% uptime. Our key objective is to make buying and selling easy. We are committed to providing customers with the highest levels of support through our friendly UK-based team, who are on-hand to help keep your business operational 24/7. Take a look at our Trust Pilot reviews, we are proud of the service we provide to thousands of businesses nationwide. For more tips to help your business grow, follow us on social or visit our website.

References.https://fitsmallbusiness.com/accept-credit-card-payments-online-free

https://www.mobilepaymentstoday.com/news/unionpay-expands-contactless-sees-online-shift-amid-covid-19https://www.pymnts.com/news/ecommerce/2020/remote-payments-retail-covid-19-social-distancing

https://www.electran.org/publication/transactiontrends/category/covid-19 https://www.essentialretail.com/news/covid-10-imrg-trends-online-retail

https://www.bigcommerce.co.uk/ecommerce-answers/whats-shopping-carthttps://www.paymotion.com/ecommerce-blog/5-advantages-hosted-checkout-solution

https://www.roirevolution.com/blog/2020/04/coronavirus-and-ecommerce https://www.mobiletransaction.org/what-is-merchant-account

https://www.web-merchant.co.uk/paymentoptions.asp https://www.ayima.com/blog/the-impact-of-covid-19-on-user-behaviour-and-ecommerce.html

https://www.quicksprout.com/checkout-process-designhttps://www.website.com/beginnerguide/ecommerce/3/1/shopping-cart-and-ecommerce.ws

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