The card sell for SMEs

19 Oct 2006

The internet is an established fact of modern shopping and Irish firms trading online today have a choice as to how they accept payments. However, with this they are also faced with a raft of new fraudulent activities from which they need to protect their customers. Card-not-present fraud is the latest scam threatening e-commerce activity.

“It’s a huge issue,” says Colm Lyon, managing director of Realex Payments. Most third-party providers offer risk management tools to help merchants make informed decisions about whether to accept a payment or not. Things such as IP address, negative past experience with the card number and whether the billing address and delivery address match would be automatically checked.

One initiative that looks set to become standard within the next two years is the 3D Secure initiative, a security scheme rolled out by Visa and MasterCard. During the online sales process shoppers are redirected to a screen hosted by their card-issuing bank where they confirm their identity by submitting a password. This process shifts the liability from the merchant to the banks in the case of fraud or chargebacks, an added reassurance for online retailers.

“The number of online retailers using the process is increasing and recently a large merchant has gone live with the service which will hopefully encourage more consumers to activate their credit cards for the process, assuming their issuing bank has enrolled them,” says Lyon.

“There is no doubt that the authentication of consumers when shopping online will reduce risks and costs for all parties involved and thus be a catalyst for further growth in online trade.”

“Chip and PIN rollout took approximately 18 months so in a similar timeframe you’ll see the adoption of 3D secure,” says John Clarke, director of e-commerce at EuroConex.

Micro businesses or lower-volume traders might look to payment options such as PayPal, Nochex or Google Checkout. These services allow users to send and receive money online without the need for a third-party consultation.

One of the main advantages of these services is that shoppers don’t need to input their credit card details every time they make a payment. With PayPal, for example, merchants can receive payments from anybody with a PayPal account. The money is sent electronically from one PayPal account to another.

However, payment processing services have only been available locally in recent years and security measures against fraud in the early days of the web were crude at best.

When Greg Turley (pictured), CEO of car rental firm Argus Car Hire, decided to bring his business online in 1996 there were virtually no efficient structures in place to process payments on the internet. “The Irish banks at the time had little or no knowledge of processing online payments so it was a real grey area,” says Turley.

Would-be net entrepreneurs need to get the basics right before they can make a killing on this new playing field. One of the first major steps is to set up your website to accept credit card payments. There are a few options available that cater for everything from the casual trader to the high-volume merchant.

Most small to medium-sized enterprises (SMEs) will approach a third-party payment provider to set up their website for card transactions. “There’s a lot of specialist pieces of work that need to be done to accept transactions, even down to the look and feel of a website,” says Clarke. His company acts as a liaison between third-party providers and the banks.

About 60 third-party providers feed into the EuroConex system, he says, with Realex Payments being the biggest third-party provider among Irish SMEs. “Third-party providers’ real value-add is in providing that information to the SMEs to make it as easy as possible for them to link into something like EuroConex,” he adds.

Clarke explains that there are two main ways a business can incorporate payment processing on its website. The first is where the merchant will have the credit card facility on their site themselves. “They [third-party providers] build those screens onto your site where you enter your credit card number, expiry date, etc.”

The second and easier way is to redirect customers to a site hosted by the third-party provider. “On a business’s site when you hit ‘pay’ it redirects you to a third-party provider site, which may be branded with the merchant’s brand so you don’t see any difference at all but the third-party provider is actually hosting that on behalf of the merchant. That’s by far the easiest way of merchants getting set up initially.”

Businesses looking to start trading online could get themselves set up within a week, estimates Clarke. The service offered by third-party providers is on a per transaction basis with a monthly minimum. “As in all business, the higher volume you have the more flexibility you have to negotiate.”

Security is one of the biggest issues relating to online sales. By processing credit cards over the internet, merchants have a responsibility to defend customers against new areas of fraud.

Online vroom vroom in e-payments
For Greg Turley of, finding a bank back in 1996 that was capable of providing the processing of online payments was one of the biggest hurdles the company faced at the time. His company, then known as Argus Car Hire, found the internet was a way around the roadblocks put in place by travel agents and the giant global distribution system (GDS) firms to win business.

“Back then the only way we could win business was to sit outside the airport and hopefully catch the eye of visiting tourists. We really wanted to establish a relationship with them before they set foot here. The only way to do that was to do a deal with the GDS providers and that meant surrendering a large percentage of your turnover, which we weren’t prepared to do. We read about a thing called the internet and set up a website that really was a brochure with two pages,” says Turley.

At the time, Turley says, the Irish banks weren’t up to speed on processing internet payments and otherwise it meant going directly to credit card firms like Visa and MasterCard. “The banks at that time were pretty much Third World when it came to internet payments.

“In the early days we were one of the first Irish website providers to take payments over the internet but at the time it meant a person taking down credit card details and manually inserting the numbers into a credit card machine.”

Today, Turley recommends more secure methods provided by dedicated local online payment processing firms such as Realex, which currently processes over €3bn a year worth of online payments for Irish companies including Ryanair and

“In 1999 we were the first European car hire site to take credit card payments,” says Turley, whose company has spawned a bigger firm called, which provides a white brand booking portal for travel and tourism websites. “We effectively had to develop our own technology and now we give it away for free and get part of the commission for the rental,” says Turley, whose product is now used by more than 450 suppliers in 135 countries.

Turley’s web-booking technology firm that grew out of has already outstripped the growth of the original car hire business and caters specifically for DIY travellers who are looking for the best deals in car hire.

In the first half of 2006, revenues increased by over 56pc, which the company attributes to strong sales of its web-enabled car rental distribution technology.

“My advice to any SME out there that wants to transact online is to identify a reputable payment processing firm that will handle all requirements and leave you to focus on developing your business.”

E-commerce resources online
Ireland’s biggest provider of online payment processing
PayPal, owned by eBay, is the main payment option for the auction site. The company takes a small percentage of payments received. It is free to set up initially, fairly simple to use and there are no monthly charges
Similar to Paypal, Nochex caters for small to medium-sized businesses or individuals
A payment service provider for firms transacting more than €5,000 per month
New payment service recently launched by the search firm.

By Niall Byrne