Q. Why should my business
do E-commerce Trading?
A1. If you have
products you wish to sell. If you don't implement e-commerce then
you just
might be left wishing you had introduced it ahead of your competition
particularly as you discover that your competition is no longer the
people around the corner but now at the other end of the UK or even in the USA!
A2. Maybe you have decided that
you have a very unique product or service which would be extremely viable
particularly if your market place was the world and not just people passing by
your shop.
A3. Maybe you like the thought
of making sales even whilst you sleep!
E-commerce Trading is what
makes the above possible!
Q. What do I need in order to
have a web site offering sales via the Internet?
A. There are a number of
components:
1. A web site - this is the
place where your files and web pages are stored.
2. A web address known as a
domain name URL (Uniform Resource Locator) e.g. www.yourbusinessname.co.uk or
www.yourbusinessname.com .This is how people can access your web site from the
internet by entering the URL in the address field of their internet browser. In
general if your customers will only come to you from within the UK then .co.uk
is the usual choice, however if you expect customers from anywhere in the world
then .com is more usual. There are different authorities who control the
allocation of names depending on the co.uk or .com name. "yourbusinessname" has
to be unique so you have to select a name which hasn't already been allocated
and ideally will convey something meaningful to your prospective clients. A
simple way to find out if the name you want is already allocated is to type the
address into your address bar of your browser - if it comes back with web pages
then it's taken, if it returns 'the page cannot be displayed' or 'server error'
then it is probably free.
3. A means for customers to
VIEW whatever it is you are selling. If you only wish to sell a few items e.g.
less than 20 then this can be achieved by one or more tailored web pages which
detail your product offerings. For more than 20 items it is recommended that
you use a package which can assist with documenting and formatting your
offerings.
4. A means for customers to
PURCHASE whatever it is you are selling. Once again this depends on the
quantity but also it depends on whether you wish to receive payment before
delivery or afterwards. If you require payment in advance then it is
recommended that you use a package which can perform the task of taking your
customer's details. If you only intend to invoice after or at delivery then a
simpler form of taking customer details can suffice e.g. a form or an email of
the order.
5. A means for you to receive
and manage PURCHASE ORDERS from your customers. As before this depends on the
quantity of orders you will be expecting - if these are likely to exceed 10 a
week then it is probably better to use a package which will assist you to
manage orders.
6. If you intend to take credit
card payments then you need a method for doing this. There are two ways to do
this, the first is to use a package which does all the work for you, the other
is to collect your customer's details when they place their order and then use
traditional methods to collect payment e.g. Barclay's PDQ Terminal or Nat
West's Streamline Card Processing Services. In either case you need to have a
Merchant account with what is known as your acquiring bank i.e. where your
payments will finally end up. When you use a package then it is necessary to
have an arrangement with an Internet Service Bureau to handle the transaction
with your acquiring bank, some Bureaux however may also act as your acquiring
bank.
Q. This all sounds very
complicated, is it?
A. Not really but just to recap
you need: A web site; a web address; either web pages or a package; a payment
collection method i.e. Invoice for cheque payment or Merchant account for
handling transactions i.e. Visa terminal or Bureau or PayPal.
Q. Isn't there just once place
I can go to get this all sorted for me?
A. Yes - you have a choice:
1. There are Bureaux that offer
everything you need. They charge monthly fees which are dependent on the number
of items you wish to sell. Draw backs include the tendency to be expensive, web
sites offered may have restricted design and content, you may pay a premium for
their choice of software and payment Bureau, you will be inevitably locked in
to their service which may give rise to future problems on service issues or
future charges.
2. www.webjoy.co.uk is
independent and can provide a fully supported service. It will work with you to
establish a site which meets your full requirements and find the most economic
solution which meets your budget. Webjoy can provide an independent consultancy
service for whatever form of E-commerce solution you wish to explore and adopt.
The solution will be transferable to any future service provider.
Q. When would you recommend
buying an E-commerce package?
A. If you intend to sell more
than 20 items or receive more than 10 purchase orders a week.
Q. When would you recommend
offering Credit Card payment?
A. If you intend to sell more
than 20 items or receive more than 10 purchase orders a week.
PayPal makes this simpler.
Q. What does all this cost?
A. In the region of
£2000 - this depends on whether you use a package and whether you intend
to take credit card payments - below are some rough figures:
1. A web site, 1st years
hosting, domain name registration £495.
2. An E-commerce package
including license fee, set up & training with 50 product items £500.
3. Bureau & acquiring bank
set up charges £300. Nothing if you use PayPal.
4. Ongoing support, updates
& search engine registration £720 per year.
Q. What are the typical
charges for Credit Card processing?
A. There are four possible:
1. The acquiring bank's charge
for handling the credit card transaction to your merchant account, Typically 3%
of transaction value.
2. The Bureau's charges for
taking the payment from the Internet, doing validation checks and forwarding
the authorised payment to your acquiring bank merchant account. Typically 2.25%
of transaction value. Some just charge a fixed amount e.g. a monthly fee of
£10 plus 39p per transaction.
3. Bureau charges for taking
the payment from the Internet and acting as the acquiring bank (i.e.
combination of 1 & 2 above). Typically 4.5% of transaction value.
4. Paypal charges 3.4%
plus 20p per transaction when your monthly transactions amount to
less than £1500.
Q. Why wouldn't I just use a
Bureau which also acts as an acquiring bank?
A. You may already use your
acquiring bank for credit card transactions therefore it may be more economic
to include these transactions. Beware however that some banks insist you have a
separate Merchant account for internet based transactions e.g. Barclays and
NatWest.
Q. Are there any other
considerations when deciding on which way to handle Credit Card transactions?
A. You would need to know when
you are likely to be paid, the banking term is receive your remittance! It is
not untypical to have to wait up to four weeks from the transaction to
receiving your remittance. If you are using both a bureau and an acquiring bank
this may be longer. If you intend to deal in multiple currencies then a Bureau
service is likely to be your best option. PayPal credits your
account as soon as payment is received.
Q. How long do Bureaux and
banks take to process applications for merchant accounts?
A. This can take anything
between 48 hours to 4 weeks following receipt of your application.
Q. What is the best solution
for handling credit card solutions if I've never received such payments before?
A. If you only intend to take
payments via the internet then a Bureau which also offers the acquiring bank
facility is probably the best. PayPal is a simple example.
Q. What packages are
available for E-commerce?
A. These are a few: Actinic,
ecBuilder Pro, Click and Build, Web Street, Shop@Assist, NetStart
Q. What are the names of some
Bureaux?
A. PayPal, SecPay, NetBanx,
WorldPay,
Web Street, NetShopper UK
Q. Which Bureaux also act as
acquiring banks?
A. NetBanx, WorldPay
Q.What are the names of some
acquiring banks?
A. Natwest, Barclays, HSBC,
Royal Bank of Scotland
Q. What are the security
issues of using the Internet for payments?
A. There are many but here are
some safeguards:
1. Credit card details should
only be provided if you can assure yourself that the web site is operating
under British jurisdiction i.e. is operated by a UK registered company or
trader.
2. Credit card details should
only be submitted if the web page displays a secure sockets layer encryption
icon (usually an unbroken gold key on the browser). Alternatively the site
should display assurances that all details provided by customers are securely
encrypted using 128-bit encryption.
3. All E-commerce packages and
Bureau Services listed above provide this level of encryption. When using a
Bureau Service requests for credit card details are actually presented to the
client from the Bureau's own web site having been forwarded there by your
E-commerce package.
4. The internet is no less
secure (and is usually more secure if the above points are followed) than
giving your credit card details over the telephone to someone or a waitor in a
restaurant.
5. Credit Card transactions
over the internet are automatically guaranteed from abuse for all transactions
with a value in excess of £50.
6. It is good practice to use
a separate credit card for your Internet transactions in order to spot easily
any possible misuse. Some credit card companies now offer automatic protection
against misuse and will not charge you for such transactions e.g. EGG.
7. With most E-commerce
packages it is possible to give customers the choice to present their credit
card details via the package or separately via email or by phone.
Q. How do I attract customers
to my E-commerce web site?
A. There are various ways:
1. Register your web site with
a Seach Engine.
2. Register your web site with
any local service web sites.
3. Advertise your URL on all
your companies headed paper, invoices, advertisements, business premises, press
releases, radio & television etc.
4. Join a web site referrals
syndicate.
5. Get your customers to use
your site, have something which will attract them back time and again e.g. Tips
page - something particular to your trade or business.
6. Use a local search engine
such as www.glastonbury.co.uk in order to reach local people in the Glastonbury area.
7. Use a company like
www.webjoy.co.uk who provide an ongoing registration and support service.
Q. I want to be able to sell
only half a dozen or so items from my web site, what's the next step?
A. There are three ways to go:
1. MANUAL METHOD - utilise
email cheques http://www.nochex.com/
provide a facility whereby you can collect
payment via email.
2. MANUAL METHOD - collect
customer's credit card number via the order form (which should be on a secure
server) then key in the card details via a credit card terminal. For this you
will need to acquire merchant status at your bank and hire a machine -
Barclay's is called a PDQ Terminal, NatWest call it a StreamLine Data Terminal
- there is usually a joining fee of £150 and monthly fee of around
£19 plus a transaction charge - this can be percentage of the
transaction, typically 3% or alternatively a fixed per transaction fee of e.g.
40p - You would need to check with the bank for current rates.
3. AUTOMATIC METHOD -
(e.g. PayPal) - the
order form is presented to the customer via an online Internet credit card
bureau transaction service - initiated from your web page. There are then two
choices: (1) The entire transaction is done by the service (i.e. credit card
validation and funds transfered to your bank account) or (2) the transaction is
processed in terms of credit card validation and funds transfered to your banks
merchant account. The former can typically cost 8% of the value of the
transaction and the latter 4% plus your banks merchant charge e.g. 3% -
different bureaux offer different rates and they tend to vary dependent on the
value of monthly transactions - the greater the transactions the cheaper it
becomes! You would need to add the startup and annual transaction fee which
vary between £125 and £250 p.a. and allow for a possible monthly
fee e.g. usually where the transaction fee is less or where you are using a
hosted service where your entire web site is being hosted. The whole area is a
bit like phone tarrifs, a nightmare - you have to shop around for the best deal
but then the best deal is always changing. One way to cope though is simple,
pass on the cost to the customer i.e. add on 10% to cover credit card
transactions. Once you are up and running and know the real cost then modify
charges to equal reality. If you would like to look at current rates then the
following URLs will help:
Banks
www.natwest.com
www.barclays.co.uk
Bureaux
www.paypal.co.uk
www.bms.barclays.co.uk
www.secpay.com
www.worldpay.net
www.netbanx.com
Bureaux with web site
hosting
www.netshopperuk.co.uk
www.netlink.co.uk
www.webstreet.co.uk
Q. I have a question which
you isn't listed here!
A. Send an email to
info@webjoy.co.uk and I will try to answer it within 24 hours - I'll then add
it to the FAQ list.
Nigel Billam © Webjoy
2000 - 2007
last updated
15/3/2007
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