The silent e-commerce revolution

17 May 2005

With the constant stream of stories relating to online fraud, is it any wonder that many SMEs do not set up an online sales channel? It has also been suggested in the past that Irish banks have been very risk averse when it comes to supporting online ventures — particularly those that don’t have a long history as a bricks and mortar business.

So much for the perception — in reality, what does the average business need to do to start accepting payments online for its products or services? There are three basic components: a merchant account; a payments gateway; and some e-commerce shopping cart software.

While the banks may not have changed their attitude to the risk associated with online selling — one of the riskier types of customer-not-present transactions — online traders have become more realistic with their proposals, according to Colm Lyon, managing director of Realex Payments and also chairman of the Irish Internet Association (IIA).

“You need to approach it like you are looking for a credit facility and so you will probably have to provide some collateral,” says Lyon. “It’s equivalent to looking for a credit facility equivalent to one month’s turnover — that’s what the bank could potentially be exposed to.”

Firms should also consider shopping around for a bank that will offer them merchant services — the four main ‘acquiring banks’ in Ireland that will process credit cards are Allied Irish Bank (AIB), Bank of Ireland, National Irish Bank and Ulster Bank.

The alternative to putting the elements together separately is to go to a one-stop shop that will provide all the services including a shopping cart that can be integrated into the look and feel of your website. It being the internet there are literally hundreds if not thousands of companies offering these services. Popular options with Irish retailers include Royal Bank of Scotland subsidiary WorldPay (,, which provides a centralised online shopping mall for all its clients, and, which simplifies the process of recruiting affiliates to promote your product.

An Irish-based alternative is, which uses a gateway from CardPayDirect (, merchant services from AIB and the popular osCommerce open source shopping cart technology.

One of the issues with a one-stop shop, however, is that the name that appears on the customer’s bill is that of whoever holds the merchant account, eg, WorldPay and so on, which may lead to complaints or confusion.

Lyon also maintains that such master merchant arrangements actually end up more expensive as the retailer winds up losing a larger percentage of the sale price. The commission that a bank will charge on a merchant account depends on the volume of business being processed. “On top of that we charge a fixed price per month depending on the number of transactions,” says Lyon. “The cost actually becomes irrelevant as the cost goes up.”

Both through his role with the IIA and speaking at its ongoing series of regional e-business seminars and Realex Payments’ support for more than 700 mostly Irish businesses, with many more signing up each month, Lyon believes a silent e-commerce revolution has been taking place. Certainly the range of options available to SMEs would support his opinion and suggest there has never been a better time to start selling online.

By John Collins