Selecting the right payment method

If you are considering starting an ecommerce website it is a certain bet you will come across the term Internet Payment Gateway (okay we may have used it a few times on our site) and considering the long list of companies that will offer this service it is important to have a firm understanding of what it is. An Internet Payment Gateway is one of three common methods for accepting payments on your website. Unlike the other two options, purchase orders and PayPal, using an Internet Payment Gateway means you can process credit card payments right on your website. It is however worth considering all your options.

Purchase Order

The first option is the simplest, a purchase order is when a customer places an order for a product or service but does not make any payment on the checkout process. Instead the seller and customer receive an email invoice with the intent to pay and a list of payment options available to the customer such as direct deposit or cheque. Even though this method is simple to setup it is used predominately by businesses with mostly existing customers as the disadvantage is payment is not collected on checkout and has to be waited upon.


The second option is PayPal and is the method that we recommend to most of our small business clients. For those who are not familiar with PayPal they are a third party payment provider that facilitate credit card transactions. PayPal offer a range of products, but the one with the greatest benefit is PayPal Express Checkout, which is integrated into your website. When a customer is completing a payment using this PayPal on your website they go through the normal checkout process, when they get to the payment page they are redirected to a PayPal hosted webpage to enter their credit card details. Once payment has been successfully made they are returned to your website to complete the checkout. There a several advantages to PayPal, first it is already integrated into each of our stores (if you are a DIY customer you will need to setup your PayPal account to link to your store, for Jump Start and Enterprise we look after this for you). Secondly the PayPal page that customers are directed to can be styled to match your businesses branding within certain PayPal restrictions so that it looks consistent with the checkout process (again this is also included in our Jump Start and Enterprise solutions). Lastly because PayPal is the all in one payment solution it is popular with consumers and highly trusted, plus its cost are often significantly less than that of an Internet Payment Gateway as PayPal Express Checkout is free to setup and transaction charges are around 2.4% plus $0.30.

Internet Payment Gateway

Finally, the last method is using an Internet Payment Gateway. This method allows you to process payments on your website without the customer being redirected to another third party site. The process is complicated but goes something like this, when a customer is checking out on your website they enter their credit card details and press submit. Their credit card information is then encrypted on your website and sent to an Internet Payment Gateway provider who decodes the credit card details and processes the payment between your bank and the credit card institution. Once that is completed the Internet Payment Gateway provider sends a confirmation message back to your website that payment was successfully made and to continue in the checkout process. The benefits to this method is the streamline of your checkout process, as the payment is collected on your website its fast and looks highly professional as customers are familiar with this type of method from leading sites such as The costs however can be significant, first you will need to have an SSL certificate installed on your website. This is what is used to encrypt the credit card details and also secures your website. Secondly you will need to have the Internet Payment Gateway integrated into your website (we offer this plus a SSL certificate for $450 once off). Then your financial institution will require your business to become a registered online merchant to qualify for accepting online payments which have associated application fee plus setting up an account with an Internet Payment Gateway provider which incurs yearly fees. There is some cost saving to be done however if your store processes a large amount of transactions as most providers charge around $0.30 - $0.50 per transaction, with no additional percentage fee.