Choosing the right payment system for your business and your clients

Richard Hudson of

“Providers of web solutions to small businesses”

Interesting Statistics

• Number of UK Internet Users (Aged 15+) – 38.48 million• Internet users who have bought online – 65%• Internet users using the Internet daily – 54%• Amount Spent Online in Last 6 Months per User - £573• Total Online Spending (UK) - £46.6 billion• Users who believe using a credit card online is ‘safe’ – 65%• People using the internet for business purposes – 10.96 million• Total Online Advertising Spend (2008) - £3.0 billion• Top types of sites visited (visits per month):

1) A site where you can buy a product or service – 19.19m2) Map/Direction sites – 17.35m3) Local Info services – 15.23m

Source: Actinic/BMRB Internet Monitor/IAB

Interesting Statistics

• U.K. Internet sales surged 54 percent in 2007, adding to pressure on stores as higher living expenses weigh on shoppers' incomes.

• Web sales rose to 46.6 billion pounds in 2007 and accounted for 15 percent of the country's total retail spending.

• Britons are turning to the Web for convenience and value as increased tax, utility and food bills sap spending.

• City centre retailers may lose 15 percent of their market share to online competitors over the next five years.

• Latest research has found that 49% of UK fashion companies put e-commerce systems as their top investment priority over the next three years.

Source: Bloomberg

Before you start - Market Research

• Research your Competitors (Web, eBay, Amazon, Offline)

• Selling Prices

• Postage Charges

• Availability

• Reputation

• Distribution (Local/National/Global)

• Evaluate your potential market

• Understand your customer and their needs

Before you start - Your Products

• Establish unique selling point

• Supply and Stock Availability (Lead Times)

• Manufacture for Stock, Make to Order or Drop Ship

• Selling Prices (factor in overheads and other costs)

• Financial Implications

Before you start - Taking Payments Online

• Online Credit Card Payments• Payment Bureaux (e.g. PayPal, Google Checkout)• Acquiring Payment Service Providers (e.g. Worldpay,

Barclays ePDQ, HSBC)• Payment Service Processors (e.g. Protx, SecureTrading)

• Offline Credit Card Processing (via PDQ machine) – NO!!• Offline Credit Card Processing by SMS (e.g. Adelante)• Offline Payment (e.g. Cheque, Postal Order, On Account)• Cash (using Go&Pay/Payzone outlets)• Financial Implications of Selected Option• Consider Chargebacks, Transaction Fees, Security and

Protection from Fraud• Important to Offer Different Payment Options to Customers

Comparing Credit Card Charges – Bureaux

• Paypal FREE setup and no monthly fees Transaction charges on sliding scale based on monthly sales: up to £1,500 – 3.4% plus 20 pence £1,500.01 - £6,000 – 2.9% plus 20 pence £6,000.01 - £15,000 – 2.4% plus 20 pence £15,000.01 - £55,000 – 1.9% plus 20 pence above £55,000 – 1.4% plus 20 pence

• Google Checkout FREE setup and no monthly fees Transaction charges linked to Adwords usage Sales of up to 10 x Adwords Spent – FREE Sales above this – 1.5% plus 15 pence Non Adwords Advertisers pay 1.5% plus 15 pence per transaction

Comparing Credit Card Charges – Banks

• Worldpay £75 setup, 3.35% plus 15 pence for all transactions, £15 min per month – Retain funds for 4 weeks, pay weekly

• Barclays £150 - £250 setup, 2.5% commission for all transactions, £25 min per month – 3 day clearance

• HSBC £200 setup, 3-4% commission for credit cards, 30-40 pence commission for debit cards, £20 min per month – 3 day clearance

Shop Around - Aim to pay £150 setup with 2% for credit cards and 34 pence for debit cards - £20 per month minimum commission

Comparing Credit Card Charges – Protx

Protx charge is £20 per month for up to 1000 transactions a quarter – PLUS your merchant account charges:

1. Lloyds TSB Cardnet - £75 setup, 3.35% plus 15 pence for all transactions, £15 min per month – Retain funds for 4 weeks, pay weekly

2. Barclays - £150 - £200 setup, 2.5% commission for all transactions, £20 min per month – 3 day clearance

3. HSBC - £150 setup, 3-4% commission for credit cards, 30-40 pence commission for debit cards, £20 min per month – 3 day clearance

4. Streamline - £250 max setup, 2.5-3.5% commission for credit cards, 35-55 pence commission for debit cards, £25-£30 min per month – 3 day clearance

Shop Around - Aim to pay £150 setup with 2% for credit cards and 34 pence for debit cards - £20 per month minimum commission

Shipping Charges

• Consider suitable shipping policy and charges

• Research various despatch methods (Royal Mail, Courier)

• UK, European, Global Shipping Charges

• Consider insurance and order tracking

• Don’t forget packaging materials

• Quantity, weight or value shipping model

• May influence choice of e-commerce solution

Trading Online Legally

• Data Protection Act

• Privacy and Electronic Communication Act (Spam laws etc)

• Copyright

• Trademarks

• Disability Discrimination Act

• Terms and Conditions/Privacy Policy

• Insurance

Selection of e-commerce solution – Deciding Factors

• Order volumes

• Frequency of changes to products

• Number of products

• Stock availability

• Preferred payment/shipping options

• Budget

Types of e-commerce solution – Off the shelf

Three main types• Packages included with hosting. For example:

• 1 and 1• 123-reg• Fasthosts

• Online shopping mall facilities. For example:• eBay• Amazon• Etsy

• Off the shelf software packages. For example:• Actinic• osCommerce• EKMPowershop

• All require setup and customisation which takes time and knowledge to create something unique.

Types of e-commerce solution – Static (Developed for you)

• Static buttons containing product information and prices• Limited options (e.g. colour/size)• Products do not frequently change or go out of stock• Fixed shipping charges• Order information delivered by email (not stored)• Web developer responsible for changing product details• PayPal Shopping Cart is leading solution• Google Checkout latest to enter the market • eBay or Amazon are other alternatives• Not considered full e-commerce

Types of e-commerce solution – Dynamic (Developed for you)

• Content controlled by database

• Content management facilities

• Stock management

• Order information stored and easily accessible

• Customer information available

• Automated customer contact

• Support for more complex shipping policies

• Flexible configuration and product options

Types of e-commerce solution – Advanced Features

• Featured/Related Products• Special Offers• Advanced stock control (for product options/multiple

locations)• Multiple selling price groups (retail, wholesale, distributors,

agents)• Advanced product database management• Returns Management• Discount Coupons• Reviews

Other Issues to Consider

• Accessibility of Site• Photography• Website Content (possible use of a copywriter)• Hosting (very important!!!)• Payment Processing• Security• Domain Name Registration (try www.123-reg.co.uk)• Internet Connectivity (get broadband)• Legal Issues• Insurance (e.g. Product/Public Liability/Contents)• Thorough Site Testing

Service

• Communication with Customer including Order Confirmation

• Provide Order Status Updates

• Respond to Enquiries

• Fulfil Promises

• Documentation with Goods

• Provide clear policies for delivery/returns

• Good Service Builds Brand/Business Loyalty

Establish All Project Costs

• Stock Acquisition

• Website Development (Get more than 1 quote!!!)

• Legal Costs

• Hosting Charges

• Ongoing Charges including Transaction Costs

• Cost of Marketing Campaign

• Feasibility

Useful Links

Manchester Digital - www.manchesterdigital.comManchester Digital Development Agency - www.manchesterdda.comTaking Payments Online - www.electronic-payments.co.ukHM Customs & Excise - www.hmrc.gov.ukInformation Commissioner (Data Protection Act/Privacy Laws) – www.ico.gov.ukPatent Office (Trademarks) – www.patent.gov.ukTrading Standards (Consumer Rights) – www.tradingstandards.gov.ukOffice of Fair Trading (Distance Selling Regulations) – www.oft.gov.ukRoyal Mail – www.royalmail.comVanilla Storm – www.vanillastorm.comE-Commerce Guide - www.ecommerce-guide.comInternet Business Manifesto - www.strategicprofits.com/manifesto/Contract Store – www.contractstore.com

Thank You

ANY QUESTIONS?

If you need help with your business call:Richard Hudson

Vanilla Storm LimitedT 0161 282 4525

E rh@vanillastorm.co.ukW www.vanillastorm.com