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One of the most common questions we get
asked at Wooza Shop is about online payment options in South Africa.
The general consensus is that if you have an online shop, you need to
accept credit card payments to do business with the majority of the
online shopping market. However, selecting the right option can prove
to be a bit daunting for newer shop owners. Thus we have created
this article to give a brief explanation and comparison of the
various online payment options.
We will discuss two options to consider
when choosing an online payment method:
-
Super merchant account; and
-
Internet payment gateways.
Super Merchants
A super merchant provides online
payment options to customers who do not wish to register for their
own merchant account. This is the simplest and quickest way to begin
accepting online payments. Of course there are various limitations
associated with this service such as a premium fee per transaction
and since there is substantial risk due to fraud for the Super
Merchant, certain restrictions are placed on payments made to this
account.
Popular examples of Super Merchants:
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2Checkout.com
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Payfast.co.za
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Netcash.co.za
Each service provider offers various
products and services, but for credit card payments costs can be
broken into three categories:
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Setup fee
-
Monthly fee
-
Transactional fee
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Service Provider
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Setup Fee
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Monthly Fee
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Transactional Fee
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2Checkout.com
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$49 (~R340)
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n/a
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5.5% + $0.45
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Payfast.co.za
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n/a
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n/a
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4.9% + R2
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Netcash.co.za
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R425
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R160
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5% + R1
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Discounts
do apply to higher transactional volumes.
Internet
Payment Gateways
Internet
payment gateways provide a secure means of accepting online credit
card payments. A merchant account is still required with the bank
which can take some time and a substantial amount of paper
work to obtain. However, this is generally a cheaper option than a
Super Merchant account and typically has a lower transactional fee.
There are also less restrictions on payments and the service
providers typically assist in obtaining your merchant account from
the relevant bank. Some of the more popular internet payment
gateways:
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MyGate.co.za
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VCS.co.za
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Setcom.co.za
Each service provider also has their
own setup, monthly and transactional fees as follows:
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Service Provider
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Setup Fee
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Monthly Fee
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Transactional Fee
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MyGate.co.za
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R250
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R250.00 min
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R1.80
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VCS.co.za
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n/a
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R145 min
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0.5% + R1
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Setcom.co.za
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R250
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R250
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1% + R1
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Costs for setting up a merchant account
with a bank are as follows:
-
Setup (up to R500.00)
-
Commission (5 to 7 percent)
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Monthly minium charge (up to
R300.00)
Some of the monthly fees above are
referred to as a minimum. This means that the monthly fee includes
your transactional costs. Prices are quoted excluding VAT.
We advise our customers to begin their
online experience initially using EFT payments only. From a recent
survey conducted by jump.co.za, more and more online shops/customers
are using EFT payments as the norm due to the high risk of internet
fraud as well as the costs involved with credit card payments. As
business increases, it becomes more feesible to invest in different
payment methods.
Lastly, one very important note: all
prices are negotiable! The more transactions you have, the more
negotiating power you will have with your service provider. Try to
get an idea of what discounts your service provider is prepared to
give you based on increasing transactional volumes before you
sign-up. This gives you a greater advantage of achiveing a discounted
rate when your transactional volume eventually does increase.
With the various payment options, th
ebest choice is often made based on the type of transactions and the
volume of transactions you expect to make. If you forecast a steady
increase in transactional volume, factor this into your calculations
before choosing yoru service provider, as this may reduce your
running cost over the long run.
If you have any further queries on
ecommerce in South Africa or online payments, please send us a mail
at
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