Receiving online payments

By setting up a website and using the internet to accept payments or donations online, you can reach new customers, reduce costs and sell more efficiently. There are a range of online payments providers available today, for example Lloyds Bank Cardnet.

1. The benefits

Meet your customers’ ever evolving buying habits

Make it easier for your customers or benefactors to buy from you. With products and services only a click away, ecommerce can be more appealing to today's consumers than traditional in-store shopping. Nowhere is this more apparent than in the UK, where consumers do more shopping online than any other major country.

During 2019’s Christmas shopping peak around 21.5% of retail sales were made online, according to the Office for National Statistics. They were at 2.5% for Christmas 2006 - a clear indication that internet sales are taking an ever-growing market share. So, to keep a competitive advantage, you need to be able to service your customers in the way they want.

In addition, ecommerce could allow your business to:

  • offer customers a wider range of products
  • promote best sellers more efficiently
  • personalise your customers’ shopping experience
  • offer discounts, promotions or sales more efficiently.

Knowing your customers’ shopping habits and tastes will allow your business to market targeted promotions directly to individuals or groups.

Eliminate time and location restraints

Businesses can meet their customers’ shopping habits by trading 24/7, 365 days a year online. In addition, your business will be able to reach new customers or benefactors outside your traditional geographic area and across all time zones by doing business online. When the working day ends here in the UK, it’s only beginning in other parts of the world. You can easily accept transactions in a range of currencies with many of the payment systems available.

Reduce costs

Even as far back as 2012, the UK Government said of its services: ‘The average cost of a digital transaction was almost 20 times lower than the cost of a telephone transaction, about 30 times lower than the cost of a postal transaction and about 50 times lower than a face-to-face transaction. Digitisation is also likely to reduce the risk of failed transactions, and therefore the business cost of having to go through the same process multiple times.’1

Similar sorts of savings can be made by businesses. Transacting online often frees up money once spent on post, traditional marketing tactics, storage, showroom and retail space, and the many other outgoings associated with running a 'bricks and mortar' company. The time and money you save by handling money online can be reinvested into building and growing your organisation. Ecommerce offers the ability to scale up more quickly and at lower cost than with a traditional, physical business.

1 Digital Efficiency Report

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2. How to do it

Build an ecommerce-enabled website

Ecommerce refers to any site that allows people to pay directly online.

If you don’t already have an ecommerce website, you’ll need to purchase a domain name (e.g. mycompany.com) from a domain registrar. There are many domain registrars available online such as Google Domains, or you can get a domain name through the third-party website builder you use to create your website.

When building an ecommerce-enabled website, or adding an ecommerce section to an existing website, there are three main options to choose from:

  • Work with a Payments Provider who is able to support your business in building a website which is enabled to take payments. There are a number to choose from including the Lloyds Bank Cardnet’s Web In A Box solution.
  • Hire a web designer to create or update an existing website that can be used for online transactions.
  • Build your own website using one of a number of third-party website builders. For example, sites like Ecwid allow you to build a website using simple, customisable templates with many themes that have pre-built integrations into a number of payment gateways including Lloyds Bank Cardnet or your current card payment provider.

Whichever option you choose, make sure the website is designed so that you can easily manage it, without needing to rely on a programmer to make simple changes or add new pages. You also want to consider what information you can get from your website, such as inventory tracking, follow-up emails, advertising campaigns and features that support extending marketing with social media extensions. See our guide to creating a business website for more detailed information.

You will need to make sure that the shop elements of your website are well-integrated into the site so that people can easily find what they want to buy, add items to their shopping basket and then pay smoothly.

Your website should give your visitors the information they need to make decisions about whether to buy or donate. For products, this will mean providing good descriptions and images. Think about the questions a customer might ask and try to include that information in product details. Have a look at sites that you like and buy from regularly for ideas about how to do it well.

Attract customers to your site

For your site to be really effective you should make sure that potential customers or donors are able to find you and your products. Ideally, your web pages will be optimised so that when users search for something on Google, Bing or another search engine, your website will appear high up in the results – this is known as search engine optimisation (SEO). Google has a handy Search Engine Optimization Starter Guide for businesses and charities.

See more on marketing and advertising: the law.

Use aggregators, Amazon, eBay and other partnerships. As well as having your own website, you might want to explore whether being included on the website of an aggregator works for you, such as a hotel booking site or the equivalent for your business. You will have to think about pricing, profit margins and any associated costs to know if it would be cost effective. You could also consider setting up a shop on Amazon or eBay – but you need to evaluate the advantages of their very large user bases against the disadvantages of the customer having the relationship with them, rather than directly with you.

Build an App or Online Ordering Platform

If a full website doesn’t suit your particular business model you can build your own branded App. There are many providers in the market place who are able to offer this service. You can get access to branded mobile and online ordering platforms that allow someone to book and pay for a service or product. This solution could suit the requirements of your business whether, for example, you are a restaurant, mobile hairdresser, laundry service or window cleaner. Make sure the platform offers you a flexible and customisable solution to suit your needs and can scale up as your business grows to help you achieve your goals. To give you an idea of how this could work, have a look at what Lloyds Bank Cardnet offers in conjunction with Preoday to see how online ordering platforms work and the options available.

How online payments work

To take online payments you need a mechanism for getting the money from your customer or donor to your bank account. Fortunately, there are good services out there to allow you to do this.

You will need a page on your website to start the process that facilitates the customer in being able to make a payment for the items or services being offered. Customers will typically make payments using credit or debit cards, or via wallets such as GooglePay or ApplePay. You, the merchant, need to partner with a bank that will accept these payments and deposit them into your merchant account. A merchant account is a special kind of bank account used exclusively to hold funds received from credit and debit card transactions. Funds accumulating in your merchant account will be transferred to your organisation’s bank account regularly.

Merchant providers must follow the rules established by the card associations.

Payment gateway is a service provider often referred to as a Payment Service Provider (PSP) and is needed to link your website’s shopping basket or donor form to the card processing network. Lloyds Bank Cardnet has a Payment Gateway platform that can support this requirement. It is important to identify a suitable Payment Gateway that can meet the initial and future needs of your business, such as the ability to support tokenisation, which is the technology that allows your customers to securely store their card details in a virtual wallet to let them pay simply and easily at your checkout without fuss.

Fraudsters often target ecommerce websites from various locations and therefore choosing a Gateway that has a good fraud management offering is certainly something which should be seriously evaluated when selecting the right platform.

Merchant acquirer will handle the transaction, moving it through the processing network. The merchant acquirer will also send you a billing statement and work with your bank to implement anti-fraud technology. Your merchant bank can also be your merchant acquirer, which helps simplify things.

It can be helpful for business owners and charities to understand exactly how the transaction process works so you know how long it will take and what is involved.

This is how the process generally works, step by step.

  1. Your customer buys an item on your website with a credit or debit card.
  2. Their personal details and card information go through the payment gateway, which encrypts the data to keep it safe before forwarding it to the merchant acquirer.
  3. The merchant acquirer sends a request to the customer’s issuing bank requesting the money to pay for the items or services they wish to purchase.
  4. The issuer will either approve or refuse the transaction.
  5. If approved, the result is passed back through to the payment gateway to advise that the transaction is accepted, and also tells your merchant bank to credit your account. The customer will be told whether or not their payment is accepted. If the payment is refused, you can simply cancel the purchase with the buyer, or request an alternative card or payment method.
  6. This part of the process all takes place within a few seconds. The second part of the process – known as settlement – can take up to a few days.

  7. The card issuer sends the funds to your merchant bank, which deposits the money into your account.
  8. The funds are available for you to use. Your bank may let you access your money before it is even sent to them, but this can vary between banks and accounts. It is also possible that the bank may ringfence some of the money in your account that you can’t yet spend – this is known as a reserve. It is done in case the customer decides to return the goods later. Under the Distance Selling Regulations customers have the right to change their minds within 14 days.

3DSecure touchpoints

When you are considering your provider options make sure you fully understand the fees you will pay. Charges can include a Merchant Service Charges (MSC), fee per transaction, set up fees and monthly fees too.

Choose secure payment software

Making sure your customer’s money is safe and secure is essential. This needs to be considered in your decisions about how you build your website, which providers you select and how these integrate. Some solutions will have secure, in-built payment software modules that connect to secure payment gateways. Take a look at Lloyds Bank Cardnet Web In A Box to see one example of how that can work.

If you haven’t gone for a packaged approach you will need to select secure, third-party payment software, such as Google Wallet or Paypal, to ensure your customers' payment details are properly protected. There are also secure payment options designed specifically for non-profit organisations to use for accepting donations, such as Blackbaud and DonorPerfect.

Use tools to view online transactions

In your planning you should also consider what tools you need to give you the right level of oversight and management information. There are multiple tools available that enable you to:

  • track transaction details
  • oversee order management – this is often built into the ecommerce cart software
  • get gateway reporting and reconciliation
  • see reporting statements from the merchant acquirer.

It can help to think about these processes as similar to online banking, but for your website – allowing you to view details of incoming payments and transaction details.

All websites taking payments are required to process these ecommerce transactions using 3DSecure. This ensures you are compliant with Strong Customer Authentication (SCA) regulation and providing heightened security for both you and the customer. This greater level of authentication will be required from 14 September 2021 and Lloyds Bank Cardnet is able to support this advance level of security and fraud prevention.

For more information see the Lloyds Bank Cardnet guide to Strong Customer Authentication and download our PDF guide.

Review Payment Card Industry (PCI) regulations

These industry PCI regulations apply to any company accepting payments by card. When choosing your card payments provider think about how much help you will need to stay compliant with the regulations that apply to your website’s payment pages. If you decide to use Lloyds Bank Cardnet you will have access to a dedicated team to help guide you through the PCI regulations.

If you have third parties involved in processing or storing card transaction data on your behalf, you need to ensure that they are compliant. Third parties can include software providers, Payment Service Providers/Gateways and web hosting companies, to name just a few.

Please note that these are just examples of the types of software available and Lloyds Bank does not endorse the services they provide.

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3. Useful information

Glossary of terms used in payments

Acquiring bank / AcquirerA financial institution that processes card payments on a merchant’s behalf, such as Lloyds Bank Cardnet.
Issuer/ Issuing bankThe bank (or financial institution) that issued a customer with their card and maintains a contract with them for repayment of card transactions.
Merchant servicesA generic term for services that enable businesses to accept payments securely in accordance with industry standards and Card Scheme rules.
Payment gatewayA secure server that processes online card payments, encrypting sensitive information in order to safely transmit payment information between the customer’s Issuing bank, the Card Scheme and the Acquiring Bank.
PCI DSSThe Payment Card Industry Data Security Standards are a set of mandatory security requirements designed to ensure that merchants process, transmit and store cardholder data securely.
Payment Service Provider (PSP)This is a company that allows you to trade when the customer is not present in your business’s face-to-face environment – however many also now offer Payment Gateway solutions for ecommerce.
3DSecureA technical standard created by Visa and Mastercard to further secure Card Not present transactions over the internet. It adds an extra customer verification layer to further reduce fraudulent transactions.

For more terms used in the payment industry see our fuller Lloyds Bank Cardnet glossary

Information you must display to legally receive money online

How to maintain payment security

See our guide to security compliance for merchants


Cardnet® is a registered trademark of Lloyds Bank plc.
While all reasonable care has been taken to ensure that the information provided is correct, no liability is accepted by Lloyds Bank for any loss or damage caused to any person relying on any statement or omission. This is for information only and should not be relied upon as offering advice for any set of circumstances. Specific advice should always be sought in each instance.

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Important legal information

The products and services outlined on this site may be offered by legal entities from across Lloyds Banking Group, including Lloyds Bank plc and Lloyds Bank Corporate Markets plc. Lloyds Bank plc and Lloyds Bank Corporate Markets plc are separate legal entities within the Lloyds Banking Group.

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Lloyds Bank is a trading name of Lloyds Bank plc, Bank of Scotland plc and Lloyds Bank Corporate Markets plc. Lloyds Bank plc. Registered Office: 25 Gresham Street, London EC2V 7HN. Registered in England and Wales no.2065. Bank of Scotland plc. Registered Office: The Mound, Edinburgh EH1 1YZ. Registered in Scotland no. SC327000. Lloyds Bank Corporate Markets plc. Registered office 25 Gresham Street, London EC2V 7HN. Registered in England and Wales no. 10399850. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under registration number 119278, 169628 and 763256 respectively.

Eligible deposits with us are protected by the Financial Services Compensation Scheme (FSCS). We are covered by the Financial Ombudsman Service (FOS). Please note that due to FSCS and FOS eligibility criteria not all business customers will be covered.

Lloyds Banking Group includes companies using brands including Lloyds Bank, Halifax and Bank of Scotland and their associated companies. More information on Lloyds Banking Group can be found at www.lloydsbankinggroup.com

While all reasonable care has been taken to ensure that the information provided is correct, no liability is accepted by Lloyds Bank for any loss or damage caused to any person relying on any statement or omission. This is for information only and should not be relied upon as offering advice for any set of circumstances. Specific advice should always be sought in each instance.