The Essential Guide to Electronic Payment Systems for Small BusinessesProduct Information 7 January 2019
Thinking of accepting card payments for your small business? If so, here are the facts presented in a straight-forward, jargon-free way.
The first thing you might want to know is how important card purchases are in the UK.
How important are electronic payment systems in the UK?
According to UK Finance, the bank industry’s trade body, in 2017, 38 billion payments were made in the UK.
Of that total, debit and credit cards were used for 16.3 billion payments, meaning just 13.1 billion cash payments were made. This means that the use of cash has continued to decline and fell by 15% in 2017. In 2007, cash accounted for 61% of payments and ten years later, in 2017 had fallen to just 34%.
So, cards are now the UK’s favourite payment method. If you don’t offer your customers the option of paying by card, will one of your competitors?
Still not convinced? Here’s some new research that may make you change your mind. For a start, 98% of the population now hold a debit card and 60% have a credit card.
A recent survey showed that 40% of young people born between the 1980s and 1990s would happily give up cash for credit or debit card transactions. You can’t ignore them, by 2020, they will make up more than 50% of the UK workforce.
Looking to the future, UK Finance estimates that by 2027 debit and credit card volumes will increase to 23.6 billion purchases.
This growth will be driven by the continuing rise of electronic payments and online shopping.
What is an electronic payment system?
Quite simply, it’s a way of making paperless transactions by paying for goods and services through an electronic medium. It’s also called an e-payment system, an e-commerce payment system and an online payment system.
How do electronic payment systems work?
Without getting too technical, the easiest way of describing how electronic payment processing works, is to start with the six people, or organisations involved in the process and how they work together. So, let’s start with the customer…
- The cardholder or customer buys a product or service online.
- The person or business that sells the product or service to the cardholder. In the financial services industry, you are called the merchant.
- The bank, or financial institution that provides the cardholder with the payment card is called the issuer.
- The financial institution that establishes an account with the business (you, the merchant), Is called the acquirer, or merchant account provider. The acquirer authorises the cardholder account.
- A payments processor handles the official transaction between the cardholder and merchant.
- Finally there is the payment gateway, which processes merchant payment messages and uses security protocols and encryptions to ensure security. We cover more on payment gateways later.
That’s it. It takes only a few minutes to process payments. Unlike cheques, you don’t have to wait days for clearance. And, unlike cash, you don’t have to take time out to deposit the cash at your bank (assuming you still have a convenient branch nearby). Apart from personal safety issues, cash also has a higher risk of loss or theft and counterfeiting.
Methods and types of electronic payment systems
The most popular online payment methods in the UK require an online payment gateway. What’s that? You can think of it as an online version of a card machine – letting you take payments on the phone, by email or via your website.
An online payment gateway lets your business take card payments from a variety of sources: from your website, over the phone and even by email. Using one means you can offer your customers more ways to do business with you. Which gives you more chances of making a sale.
Better still, a payment gateway means you can be ready to accept card payments in 24 hours. It’s the fastest way to start accepting card payments from customers.
One gateway. Three ways to pay
Let’s take a closer look at the payment methods a payment gateway opens up for you.
When added to your website, our payment gateway acts like an online card machine. It creates a secure page that connects your customer’s bank account with your merchant account, while wrapping every transaction in layers of encryption.
Our payment gateway is not only one of the most secure payment methods; with a 100% record, it’s also the industry’s most reliable. That’s right, no downtime! What’s more, we provide ready-made code to ensure it simply plugs into any of over 40 leading ecommerce carts.
- Phone, or virtual terminal
Also known as a virtual terminal, phone-based payments are an essential back-up. What’s more, they’re also forecast to increase as not everyone is comfortable entering their bank details online.
Meanwhile, others prefer the discretion of paying over the phone. And should your website encounter any problems, you can always make a sale by phone.
This is the ultimate in discreet electronic payment methods. It lets you create and send payment links in seconds with our online portal. You can track the progress of your transaction, and follow up late-paying customers with a click of a button.
According to Finance UK, online and mobile payment methods, such as Android Pay, Apple Pay, Samsung Pay and Amazon Pay are a fast-growing part of all electronic payment systems.
Together, they now account for a greater volume of payments than either standing orders or cheques. There were 561 million payments made during 2017.
Over the next decade these payment methods are forecast to grow by 56% to 877 million payments.
UK Finance market research found that younger people are more likely than older people to use mobile payment. Currently, 37% make at least one mobile payment per week.
Mobile payments are a form of contactless but with a major advantage: customers aren’t restricted by contactless’ £30 transaction limit.
Smartphone payments usually involve extra customer validation (usually a passcode or fingerprint ID). This makes mobile payments the ideal payment method for anyone creating bespoke pieces like jewellers, artists and artisans.
Mobile card machines are perfect for taking payments on the move – ideal for taxis, couriers, delivery services, trade fairs or even exhibitions.
Mobile card machines have a SIM card pre-installed just like a mobile phone, so you can take the device out and about – this requires a phone signal. Some terminals work using an app on a smartphone, this kind of package will include a Bluetooth connected Chip and Pin keypad.
Most mobile card machines are lightweight yet robust, so when you’re on the move, you don’t have to worry about bumps and scrapes. Our mobile card machines come with the fastest printers on the market, helping you serve customers quicker than ever. Plus, just like portable card machines, you get long-life battery so you can serve all day.
Are electronic payments secure and why does it benefit your business?
Nowadays, most forms of electronic payment systems are secure, providing you take a number of precautions – 12 to be exact.
When you accept credit cards, you and your customer share sensitive, financial information through your card machine – so it’s your job to protect this data.
To keep both you and your customers safe from data theft, if you take card payments, you have to meet regulations set by the Payment Card Industry Data Security Standard (PCI DSS).
These regulations are set by the Payment Card Industry Security Standards Council (PCI) – a global forum, formed to regulate major payment brands and help merchants keep their customers’ financial data safe.
They provide education on online safety and will help maximize your website’s safety. They analyse your online transaction system, check for vulnerabilities, and fix them. The compliance team creates reports and sends them to the card brands and banks that your business is associated with. If you’re non-compliant, you can be charged a monthly fee.
So how do you get compliant? There are 12 requirements to meet PCI standards, which might mean you have to update your systems, including software and hardware. This can be a tad expensive. Don’t fret though, you probably already have some of these.
Here are the 12 requirements:
- Install and maintain a firewall
What’s a firewall? It protects information which passes through an open network. Installing a firewall keeps transactions closed and away from prying eyes.
- Change default passwords
Password ‘1, 2, 3’ won’t cut it (incredibly, 1 in 5 users have this as their password). It’s always a good idea to change default passwords to something unique. This is the first port of call against internal hacking.
- Always keep data safe
Data must be protected, not just for a one-off transaction but, according to GDPR, for years to come – until it’s either wiped or the customer changes their information.
- Encrypt public networks
Selling online? A public network is open to anyone, so you’ll need protect the transmission of cardholder data with an encryption – this converts information into a code in order to prevent unauthorised access.
- Use an updated anti-virus software
Viruses and malware can lead to corruption or file theft. That’s why it’s important to regularly run anti-virus checks and update your software.
- Develop and maintain secure electronic payment systems
If your business builds a new system or application, it’s important to maintain security. This might mean developing tools to make sure user data stays protected.
- Restrict access to data
Never give employees or third parties access to individual customer data. By combining customer accounts into one database, employees can make one change to all accounts without ever seeing an individual ID.
- Assign a unique ID to each person
If all administrators shared the same ID, it’d be easy for someone to breach security. Giving out unique IDs allows a business to keep an eye on what each employee does on the system.
- Restrict physical access to data
Closely monitor servers and storage rooms. Only give access to staff with security clearance (usually the IT department), so not just anyone can interfere with the physical part of the system.
- Track and monitor all access to the network
How can you track all transactions at once? File monitoring software can flag up anything suspicious.
- Test security systems and processes
New viruses and threats can crop up within days of a system’s last check-up – it’s a scary thought. But with regular testing, you can stay on top of any weaknesses that might compromise your security.
- Put your policy on information security in writing.
While you might already have put some of these PCI requirements into practice, put them in writing and check them regularly. It will help you maintain them and also help you avoid liability.
You’re not alone. We can help you become PCI compliant for your electronic payment systems over the phone. We make compliance easy, give you a nudge when compliance needs to be renewed and then guide you through the whole process without any costly mistakes.
When you sign up to us, we’ll send you login details to our PCI Portal. This allows you to fill out your self-assessment and report your compliance all in one go. Or call us and we’ll talk you through the whole process while you’re on the line.
Keeping your customers’ data secure is serious stuff – it doesn’t have to be painful. Once we’ve taken you through the whole process, you’ll have peace of mind knowing your business and your customer’s financial information is protected. We’re with you from start to finish.
What are the benefits for your business?
Security breaches not only seriously disrupt business, but you could lose both money and customers. In the long-term your reputation could suffer.
Ultimately, if you take the problem seriously, you could have an advantage over competitors who don’t put as much effort into online security.
How to choose the right electronic payment system for your business
Having a card reader makes sense for even the smallest business. It could help attract new customers, boost your profits and make your business appear up-to-date and professional.
Even small businesses can find themselves dealing with big queues. Card machines are tiny queue-busters. ‘Tap and go’ applies to the queue, not just the transaction.
A card machine can also speed up the time it takes to transfer funds from your customer’s account to your business account. That’s a great help when it comes to improving that all-important cash flow.
There are three types of card machine: Countertop, Portable and Mobile. Each is suitable for a particular kind of business.
- Countertop machines are best for businesses with a fixed point of sale on a counter.
- Portable card machines use wifi or Bluetooth and let you take payment to customers. They’re handy for cafes, restaurants and bars.
- Mobile card machines connect to a mobile network so you can take payment while out and about. They’re great for market traders and those who travel to events.
All our card machines feature the latest software and a built-in receipt printer. They come ready to sync with your till or EPOS straight from the box. Each accepts contactless, Apple Pay, Android Pay and Samsung Pay. And if your machine goes wayward (it happens, even to the best) we’ll have a replacement with you in 24 hours.
Everything we do is designed to support small businesses for electronic payment systems. And we really mean everything.
We can have you up and running with one of our card machines in just three days. Each small business card machine is configured to work straight from the box. There’s no complicated, or fiddly set-up. Just plug it in and you’re ready to accept card, contactless and mobile payments (like Apple Pay).
We understand that closing for business doesn’t mean your day is done. You still need to run end-of-day figures ready for processing. Our card machines can do this for you in moments, freeing your time and allowing you to leave work at work.
Find out how we can help you when it comes to setting up an electronic payment system and get set up now.