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Payment Gateways

This article is designed to explain the ins and outs of selling online and to compare and contrast some common payment gateway options.

To sell online you need a Shopping Cart. A Shopping Cart is software used in an e-Commerce website to assist people making purchases online. The software allows online shopping customers to accumulate a list of items for purchase, described metaphorically as “placing items in the shopping cart”. Upon checkout, the software typically calculates a total for the order, including shipping and handling (i.e. postage and packing) charges and the associated taxes, as applicable.

Once your customer has selected the items they wish to purchase and the price and shipping has been calculated many Shopping Carts use a Payment Gateway to perform the transaction. A Payment Gateway is the system used to validate credit card details & process transactions. Payment Gateways are used to minimise the risk to customers by providing an secure spearate website for customers to pay through. Payment Gateways adhere to a set of standards designed to ensure the security of credit card transactions.

How They Work

  • The customer enters their credit card details on the online shopping website. This is done over a secure connection (i.e. https://eshop.myservice.com).
  • The online shopping website then sends the credit card details securely to the payment gateway service, which validates the credit card details, and performs the transaction with the financial institution.
  • The payment gateway then sends back a status (ok, transaction declined etc.) to let the online shopping website to let them know if the payment has gone through.
  • If the payment has gone through, the online shopping website continues with the checkout and the customers order is processed. If not the online shopping website is notified and the transaction is declined.
  • Payment Gateway transactions incur fees and vary from Gateway to Gateway. See below for more info.

Australian Online Payment Merchants

There are multiple Payment Gateway systems servicing Australia. To help you decide which is the best merchant for you, here is a list of the different payment gateways and their pricing on their basic services:

Service Setup Fee Annual Rate Transaction Fee
Eway Free $350 $0.50
Merchant Warrior FREE $400 $0.15 (as low as)
Securepay Free $395 $0.45
Paypal $300 $545 $0.18*

* The first 200 transactions incur no transaction fee.

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