Online payments jargon

Debit and credit card payments and their application online involve some key concepts and jargon that it helps to understand.

An acquiring bank is a high street bank that offers credit and debit card processing services. It acquires the money from the customer, processes the transaction and credits your account. You need to apply for a merchant service if you want a bank to handle your electronic payments. For web-based online transactions you need an Internet Merchant Services account.

Obtaining an Internet Merchant Services account from an acquiring bank is quicker and easier if you already have "offline" card-processing facilities set up with the bank. In this case, just ask your bank for an additional Internet Merchant Services ID for use exclusively with Internet transactions. This process is normally quick, especially if the risk to your business does not change.

A Payment Service Provider (PSP) is a "virtual" swipe card service that collects the card details over the Internet and passes them to the acquiring bank. To take electronic payments over the web, you will need a PSP.

Your choice of PSP will depend on its cost and compatibility with your chosen e-commerce software solution. A fixed monthly fee starts around £15, but there are some cheaper option available starting as low as 5 pence per transaction. Usually, the higher your transaction volume the cheaper the rate you will be charged.

Some acquiring banks offer PSP services as part of their product and there are other less expensive options available.