There was a time that pretty much every e-commerce article followed the trusty old formula that centred on trotting out the classic example of Amazon as a company making its way by selling online. The irony being that back then the aforementioned bookseller had yet to turn a profit.
Things have changed: Amazon is in the black and no company, no matter how small, needs to go after that end of the market but can carve out a useful niche by selling its wares over the internet.
Colm Lyon, managing director of the payment processing firm Realex, adds that there is still a space in the Irish market for the small online trader. He doesn’t anticipate it will be the be-all and end-all but it will supplement a bricks-and-mortar business.
The definitions of what constitutes a suitable business to sell products or services via the internet doesn’t have to be narrowly defined. The web development firm Webtrade has 400 clients and these run the gamut from sellers of vitamins and beauty products to wedding stationery and hotel rooms.
One customer is the Dublin Mini Marathon, which takes payment for entry via the internet. According to Jack Donaghy, managing director of Webtrade, this is an example of how selling online can lead to cost savings. “The whole application process saved huge money for the Mini Marathon,” he points out, noting that the organisers were spared the considerable hassle of having to lodge thousands of cheques and process thousands of application forms. “The emphasis has totally shifted on the customer doing it themselves,” he adds.
In broad strokes, in order to begin selling online a small or medium-sized enterprise (SME) needs to get its products onto a system so someone within the company can control them, uploading product information and pictures. The site needs to then have a shopping cart facility and there are several to choose from. Next the business needs to set up an online merchant account with their bank which can involve some paperwork and may take several weeks to arrange.
Donaghy points out that the customer has the relationship with the bank and must deal with them directly — the web developer doesn’t become involved in this part of the process. “You would want to allow at least three weeks for that.”
He also recommends that these discussions get under way at the same time as the website development kicks off so that by the time the site is ready from a technical point of view, the company hopefully has its online merchant accreditation sorted.
AIB, the country’s biggest bank, maintains 1,400 relationship managers who help business customers with regard to financial matters. “If someone was looking to develop an online presence or e-commerce website, AIB would have a range of products to suit that,” says Adrian Moynihan of the bank’s customer strategy unit.
Once a business contacts a relationship manager at the bank, they would then arrange for a representative of the credit card acquiring department to call out to the business owner’s offices to discuss their requirements.
Donaghy suggests that it’s a good move not to set up a brand new company for the purpose because this will lack a trading history which some banks need to see in order to approve the account.
The next step is to go through an online payment clearing house. The largest one of these in Ireland is Dublin-based Realex. It relies on partners within the web development community to work with it to integrate a customer’s shopping cart engine with the Realex payment processing system.
This part of the process is more straightforward and involves connecting the online shop to the Realex system, which then communicates with the merchant bank account. According to Lyon, this can be up and running within days.
As far as the shopper is concerned, the connection between the site and the shopping cart is seamless and happens with a simple click on the ‘buy’ button, says Donaghy. “If the web development firm knows what it’s doing you can make it appear as if it’s all on the same site, although the payment is getting cleared at Realex’s servers.”
Fraud is a risk that any business must be aware of when trading online but AIB reassures companies that the bank will take the hit in most cases where an online merchant has been defrauded. “It wouldn’t be the case that a customer is liable unless there was something the company did to open themselves up to the fraud,” adds Moynihan. “Once the business acts in good faith there wouldn’t be an issue.”
Realex has developed an integrated fraud-scoring and fraud-management system that can track the amount of times that a card is used with a particular email address. “It looks for the patterns of fraud at the point of sale before the merchant completes the transaction,” says Lyon.
He points out that the potential for fraud is higher for merchants accepting Laser cards than those accepting Visa or MasterCard, because the latter two have developed a tighter security mechanism. The risk shouldn’t outweigh the benefits of selling online, he adds.
“It’s not an unsafe environment but it’s one that requires management,” he states. “This problem existed even when there was selling over the phone — anywhere the cardholder wasn’t present.”
Overall, it’s a buoyant time for the internet sector. “The value of what we process is €3bn a year; that’s what Irish businesses are selling. That’s a phenomenal amount of money when you consider that five years ago it was a few quid.”
Pictured: Colm Lyon, managing director of Irish online payments processing firm Realex
By Gordon Smith
