2012-07-18



This marks the start in a new series we will be writing about, the focus is on South African Payment Gateways that have extensions available for your WooCommerce powered shop. Setting up you online shop can be a daunting task. Between the developers, the payment gateway and the bank, there is a lot to keep track of. We hope that this series will clearly explain the processes involved.

Today we lay the groundwork for this series. After reading, you should have a firm grasp on the services available, their costs, and have a clear understanding about how the all work together in you WooCommerce store.

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What is a Payment Gateway and how does it work?

A Payment Gateway is an e-commerce service provider. Payment gateways protect credit card details by encrypting sensitive information to ensure that information is passed securely between the customer and the merchant and also between the merchant and the bank’s payment processor. It facilitates the transfer of information between a website and the acquiring bank account.

A graphic representation of the Payment Process

Step 1

The customer submits his credit card for payment.

Step 2

The payment gateway manages the complex routing of the data on behalf of the merchant through the following steps/entities.

Step 3

The payment gateway passes the secure transaction information via a secure connection to the Processor. The Merchant Bank's Processor submits the transaction to the credit card network (like Visa or MasterCard). The credit card network routes the transaction to the bank that issued the credit card to the customer.

Step 4

The issuing bank approves or declines the transaction based on the customer's available funds and passes the transaction results back to the credit card network. The credit card network relays the transaction results to the merchant bank's processor. The processor relays the transaction results to the payment gateway.

Step 5

The payment gateway stores the transaction results and sends them to the website for the customer and merchant to see.

Step 6

The merchant delivers goods or services to the buyer.

Step 7

The issuing bank sends the appropriate funds for the transaction to the credit card network, which passes the funds to the merchant's bank. The bank then deposits the funds into the merchant's bank account. This is called 'settlement', and typically the transaction funds are deposited into the merchant's primary bank account within two to four business days.

A list describing the Payment Process

Warning. This list is heavy on jargon, which is why we created the slider above, but some of you might be interested in the details.

A customer places an order on the website using their preferred payment method after entering their details, usually credit card information.

The customer’s web browser encrypts the information to be sent between the browser and the merchant’s webserver. This is done via SSL (Secure Socket Layer) encryption.

The merchant then forwards the transaction details (automated) to their payment gateway. This is another SSL encrypted connection to the payment server hosted by the payment gateway.

The payment gateway forwards the transaction information to the payment processor used by the merchant’s acquiring bank.

The payment processor forwards the transaction information to the card association (e.g., Visa/MasterCard)

The credit card issuing bank receives the authorization request and does fraud and credit or debit checks and then sends a response back to the processor with a response code (eg: approved, denied). The response code is used to define the reason why the transaction failed (such as insufficient funds, or bank link not available). Meanwhile, the credit card issuer holds an authorization associated with that merchant and consumer for the approved amount. This can impact the consumer’s ability to further spend (eg: because it reduces the line of credit available or because it puts a hold on a portion of the funds in a debit account).

The processor forwards the authorization response to the payment gateway.

The payment gateway receives the response, and forwards it on to the website where it is interpreted as a relevant response then relayed back to the merchant and cardholder. This is known as the Authorization or “Auth”

The process usually takes 2 to 3 seconds.

The merchant then fulfills the order and the above process is repeated but this time to “Clear” the authorization by consummating the transaction. Typically the “Clear” is initiated only after the merchant has fulfilled the transaction (eg: shipped the order). This results in the issuing bank ‘clearing’ the ‘auth’ (ie: moves auth-hold to a debit) and prepares them to settle with the merchant acquiring bank.

The merchant submits all their approved authorizations, in a “batch” (eg: end of day), to their acquiring bank for settlement via its processor.

The acquiring bank makes the batch settlement request of the credit card issuer.

The credit card issuer makes a settlement payment to the acquiring bank (eg: the next day)

The acquiring bank subsequently deposits the total of the approved funds in to the merchant’s nominated account (eg: the day after). This could be an account with the acquiring bank if the merchant does their banking with the same bank, or an account with another bank.

SA Payment Gateway Fees – Supported in WooCommerce

These payment gateways all have extensions available for WooCommerce. The benefit of using the extensions is that payment gateways are setup and configured, rather than developed into your website, that would be the traditional development route. But if you use WordPress and have WooCommerce, you can purchase one of these payment gateway extensions, configure a few options and start selling in minutes. Well almost, assuming you have already opened a merchant account with one of the major South African banks and have signed up with a payment gateway. The only exception is WebCash, they don’t require you to have a merchant account.

Click the logos below for each payment gateway’s website.



All of these payment gateways are sold on the WooCommerce web page for $50, for more information straight from Woo…

MyGate

Virtual Card Services

WebCash

PayGate

PayFast

SA Payment Gateway Fees

These are only the gateways supported by WooCommerce or have an extension for WooCommerce. All Fees are VAT exclusive.

VCS

Webcash

PayGate

PayFast

MyGate

Pricing Options

Virtual Online

Webcash

Starter

Medium

Premium

Business

Premiere

Cause

Classic

Performer

Prestige

Charity

Once-off account configuration / Setup Fee

Free

Free

R200.00

R200.00

R200.00

Free

R250.00

R250.00

R250.00

R99.00

Minimum Monthly Billing (Gateway)

R145.00

Free

R150.00

R300.00

R1000.00

Free

R250.00

R450.00

R750.00

R99.00

Credit Card Authorization

50c

6.0% + R2.28

R1.00

75c

50c

4.9% + R2.00 ex VAT

Reduced Fees

4.9% + R2.00 ex VAT

R1.80

R1.70

R1.60

R1.00

Refund fee

R1.00

R1.50

R1.00

50c

None

R1.80

R1.70

R1.60

R1.00

Credit Card Associations

Visa, Mastercard, AMEX, Diners Club

Visa, Mastercard

Visa, Mastercard, AMEX, Diners Club

Visa, Mastercard

Visa, Mastercard, AMEX, Diners Club

AMEX and Diners Club carry a once off R99.00 activation fee

EFT/Debit Card Authorization

R25.00 setup fee

Authorization is is R1.00 with ACB iser ID, R6.00 without

2.0% min R2.28

R200.00 Activation fee

R2.00 per authorization

R200.00 Activation fee

R1.75 per authorization

R200.00 Activation fee

R1.50 per authorization

2.0% min R2.00

2.0% min R2.00

Reduced Fees

Not Supported

Other Supported Payment Options

AutoPay, PayD, Cell Pay Point, SID

None

Ukash, PaySum1, Cell Pay Point,

Mimoney, Ukash

Mimoney, Cell Pay Point, Ebucks

Volume Discounts

Yes

No

No

Yes

No

Settlements

50c + 0.5% Commission

None

0.5%

0.4%

0.25%

R 8.77

R 8.77

Reduced Fees

None

Bank Merchant Acc Required

Yes

No

Yes

Yes

Yes

SA Banks supported

ABSA, FNB, Standard Bank, Nedbank

ABSA, FNB, Standard Bank, Nedbank, Investec

ABSA, FNB, Standard Bank, Nedbank

ABSA, FNB, Standard Bank, Nedbank

ABSA, FNB, Standard Bank, Nedbank, MCB, RBS

Merchant Account Fees

Where ‘negotiable’ is indicated, please know that some aspects of the pricing is entirely negotiated between the bank sales consultant and the applicant. The bank needs to assess your business in terms of risk, transaction values and turnover. If you are a new business, you will need to give projections, most likely for the first and second year. Existing business will need to do the same but also give past bank statements. All this information is found in the merchant account application forms issued by the banks. Contact your bank to find out about getting a merchant account.

Setup

Negotiable

R350.00

Nil

R500.00

Min Billing/month

-

R300.00

R500.00

R150.00

Commission

Negotiable

Negotiable

Negotiable

Negotiable

Admin

R120.00

Nil

Nil

Nil

From here on out we will discuss each payment gateway in a series of posts that describes the features available and how to use them in your WooCommerce powered shop. If you would like to follow this entire series, please sign up for our newsletter, to stay up to date with this and all other topics we discuss here on lsdev.biz.

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Terms

SSL: A protocol for transmitting private documents via the Internet.

Payment Processor: An entity in the credit card processing network that handles the posting of transactions for authorization, clearing and settlement to consumer credit card accounts at the card associations, and the settlement of funds to merchant bank accounts. Processors may also provide merchants with billing and reporting services.

Credit Card Issuer: The card association or branded payment cards directly to consumers.

Sources

http://www.webopedia.com/TERM/P/payment_gateway.html

http://www.webopedia.com/TERM/P/payment_processing.html

http://www.webopedia.com/TERM/S/SSL.html

http://www.webopedia.com/TERM/M/merchant_account.html

http://www.webopedia.com/quick_ref/ecommerce_shopping_process.asp

http://www.authorize.net/resources/howitworksdiagram/

http://www.authorize.net/resources/glossary/

http://en.wikipedia.org/wiki/Payment_gateway

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