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7 Ways To Accept Payments For Your Online Store

Author Syahirah Aiman AbbasSyahirah Aiman Abbas

14 min read
Money Talk

Many payment options allow you to accept credit cards and other payment types. How do you choose which method to include on your website?

7 Ways To Accept Payments For Your Online Store

As an e-commerce merchant, many payment options allow you to accept credit cards and other types of payments online. But how do you choose which online payment processing method to include on your website? Read on.

When you’re growing your e-commerce business there are so many factors that you can experiment with to increase your sales. You wouldn’t want to spend any of your time on boring and routine paperwork like accounting. That’s when you can turn to our e-commerce accountants. Drop us a line to find out more, otherwise, do read on!

How To Choose an Online Payment Processing Method That’s Best For Your Business?

Payment gateways or merchant accounts are the ones that offer online payment processing solutions.  

A payment gateway is the technology behind processing payments online, acting as the middleman between the buyer and seller. Payment gateways encrypt sensitive card details, ensures the funds are available in the customer’s bank, and allows the merchants to get paid. Examples of payment gateways in Singapore include Square, Paypal, GrabPay, DBS PayLah!

A merchant account, on the other hand, is a traditional bank offering online payment processing solutions. They help you accept credit card payments from your customers. Many merchant accounts are also payment gateways. In Singapore, banks like Standard Chartered and DBS offer merchant accounts to online sellers.

Before we go on to list all the available payments options online for you as an e-commerce seller, these are some tips to consider when choosing payment gateways and merchant accounts:

  • Be wary of tiered pricing. Some payment gateways charge different rates and fees for different card types. Tiered pricing is usually the most expensive and ambiguous option for online sellers or merchants.
  • Confirm the monthly fee rate. While you might be sold on the low per-transaction fee, the payment gateway or merchant account’s monthly fees might be high.
  • Figure in setup time and fees. There is an approval process if you opt for a traditional merchant account which takes a longer time as compared to other payment gateways, especially when you are a new business owner.
  • Read the fine print. Some payment solution service providers include in their requirements or contracts that you must engage them for at least a year, others have minimum monthly transactions for you to meet.
  • Verify compatibility. Confirm that the service providers’ plugins, software, etc. are compatible with your website or online store’s.

7 Ways To Accept Payment For Your E-commerce in 2021

  1. Debit and Credit Cards

According to Statista, 77% of respondents in a survey among online shoppers in Singapore in 2019 paid by credit card when making a purchase. Credit and debit cards remain one of the most popular payment options despite the increasing adoption and use of mobile or digital wallets. Accepting card payments online is the starting point. You could add on more payment options if you wish.

Pros Of Accepting Card Payments Cons Of Accepting Card Payments

1. Everyone has one. Nowadays more people pay by card rather than cash, and online payment gateways have made it easy for merchants to accept credit and debit card payments.

2. Speed and convenience for customers. Credit and debit card payments are processed quickly, especially if an online shopper has saved his card information on a website.

3. Access to more customers. Card payments give you a competitive edge. Accepting credit cards like Visa and Mastercard for example, gives you access to international buyers too.

1. More costs. For an online seller, the fees of accepting card payments add up quite high. Most payment gateways charge setup fees, transaction and processing fees, and monthly fees.

2. Extra bookkeeping. You need to keep track of your paying your merchant account or payment gateways monthly or yearly, and keep a record of all your transactions and invoices. For this, you can outsource your bookkeeping tasks to service providers like Osome. Drop us a chat to find out more!

3. Security and fraud risk. As payment gateways operate over the internet, there is the ever-present risk of breach of card details, however minimal. Physical cards might also be lost or stolen.

4. Chargebacks. You may be charged a chargeback fee when a customer disputes a purchase and your card processor issues a refund for him.

Top Credit And Debit Cards Used In Singapore

  • Visa

In 2019, Visa processed USD $8.8 trillion in payments volume and generated USD $23 billion in total revenue. As of 2018, it has 3.3 billion cards in circulation worldwide. It is widely accepted both in brick-and-mortar and online stores in Singapore.

  • MasterCard

In 2019, MasterCard had a payment volume of USD $6.5 trillion and its total revenue was USD $16.9 billion. As of 2020, there are 2.3 billion MasterCards in circulation globally. While Visa surpasses MasterCard in terms of transactions, purchase volume and cards in circulation, both are almost always accepted together among merchants internationally.

Both Visa and MasterCard mainly earn from service and data processing fees. However, they classify these fees differently and have distinct fee structures. Service fees are based on card volume and charged to the issuing bank. For data processing fees, Visa and MasterCard also charge them to the issuer, who pass them on to merchants who collect a per-transaction fee. They are the fees charged for the sharing of transactional information over Visa and MasterCard’s networks with merchants.

Some of the popular banks and debit cards issued in Singapore are the PAssion POSB Debit Card, DBS Visa Debit Card, HSBC Debit Card, OCBC Plus! Visa Debit Card, UOB Debit Card, Citibank Debit Mastercard, and Maybank Platinum Debit Card.

For retail and e-commerce payments, all of these banks offer merchant accounts to business owners for online payments processing.

  1. Digital and Mobile Wallets

A mobile, digital or e-wallet is a virtual wallet where users store, send, and receive money and pay for purchases made online. Mobile service providers, smartphone e-payment solutions, and financial institutions or banks are the ones who usually offer digital wallet services, e.g. SingTel, Apple Pay, Google Pay, Samsung Pay, DBS PayLah! Etc.

Pros Of Accepting Digital Wallets For Online Merchants Cons Of Accepting Digital Wallets For Online Merchants

1. Smooth payment process. Digital or mobile wallets reduce friction and cart abandonment and increase conversion rates among your customers as their payment details are already stored in their wallets. It is usually a one-click payment button without additional forms and verifications to fill up.

2. Security for merchants and consumers. Access to digital wallets is linked to users’ devices, which are locked by facial IDs, thumbprints and security codes. Merchants and consumers alike trust digital wallets providers as they provide support and resolution for purchase disputes or conflicts.

3. Responding to customers’ preferences. Customers are increasingly adopting mobile and e-wallets use. Fintechnews Singapore reported that by 2024, digital wallets would account for 27% of online purchase transactions. They are attracted by the promotions, rebates and rewards programs that digital wallets offer.

1. A high degree of localization. There are many e-wallets currently in the world. Merchants need to accept the e-wallet most used by their target market. The ones popular in Singapore include Google Pay, GrabPay, WeChat Pay, and AliPay.

2. Multiple integrations. Integrating new systems of payment within an existing website or store systems might be challenging and time-consuming for a merchant. Merchants could consider service providers like Stripe who have all-in-one API solutions that integrate with many different mobile and digital wallets.

3. Service downtimes. Online payment services and digital wallets might face in-app technical glitches or network delays, resulting in downtime for users.

Top Digital And Mobile Wallets Used In Singapore

  • GrabPay. Online shopping aggregator iPrice and analytics platform App Annie reported in a 2019 study that GrabPay has the most number of active users and downloads per month. Grab’s own Social Impact Report 2018/2019 found that cashless transactions on the Grab app are also 9 times higher than Singapore’s average cashless usage.
  • DBS PayLah! by DBS bank. DBS PayLah! is a mobile wallet that allows you to perform fund transfers and bill payments via a mobile number. The main selling point of PayLah! is its rewards and cashback programs. It is widely accepted at 80,000 locations islandwide and could be used by non-DBS account holders too.
  • Fave. Fave earns the third spot, perhaps due to its strategic partnerships with the first two in the list, GrabPay and PayLah! When you activate FavePay as a payment method for your online store, you could access Fave’s pool of 6.1 million users (both in Singapore and Malaysia) and FaveBiz, a business dashboard that presents customer and business performance data and insights relevant to you. Although technically not an e-wallet because it does not store money, it serves many functions as an e-wallet: FavePay stores credit, debit, and loyalty card details on a smartphone and processes payments.
  • Other digital wallets used in Singapore include EZ-Link, Singtel Dash, AliPay, Google Pay, PayNow, Shopee Pay, Kudos, and Apple Pay.
  1. Bank Debits

Bank debits deduct the amount spent by a customer from his bank account directly to yours. Customers give their bank account information for a merchant to deduct automatically from the customers’ bank accounts at a specific time weekly, monthly, yearly, etc. Merchants or online sellers would usually send a confirmation message or email to customers of the amount deducted at the time of deduction even though customers have pre-authorized the debits.

Direct debit is suitable for subscriptions like memberships or software, recurring payments like bills, instalment payments and rent collection.

Pros Of Direct Debit Payment Option Cons Of Direct Debit Payment Option

1. On-time billing. Businesses or service providers get paid on time without the need to chase after payments or track invoices.

2. Convenient for customers. Customers can 'set and forget' recurring payments without the fear of incurring late payment fees.

3. Less admin work. Businesses gain an average of one administration day per week when they switch to direct billing.

1. Lack of global standards. There are different rules and regulations for direct debits in different regions and countries. Merchants opting for this payment method should be familiar with them.

2. Longer settlement period. Pulling money from a customer’s account takes more time than if they were pushing them out to merchants. You would get paid up in about 5 days.

3. Risk of getting an 'insufficient funds' notification after the settlement period.

In Singapore, the most prominent direct debit payment is called GIRO. GIRO was set up in 1984 and used mostly to pay bills to government agencies, but there are also private sectors that provide GIRO payment options. Customers opting for GIRO fill in a GIRO Direct Debit Authorisation form. Bills and fees which are regular and of a fixed amount are most suitable with GIRO.

  1. Bank Redirects

Bank redirects are payment gateways that have an additional step of verification to complete a bank debit payment. At checkout, instead of entering bank account information directly, users are redirected to their online banking or payment gateway login page to authorize the payment.

These are some of the main types of bank redirects or online payment gateways:

  1. Hosted payment gateways. They direct customers away from your website’s checkout page to the Payment Service Provider’s (PSP) page where they confirm their payment details. When the purchase is paid, customers are redirected back to your website. PayPal is an example of a hosted payment gateway.

Pros: Secure, simple, and easy-to-setup. Transactions are Payment Card Industry (PCI)-compliant and protected against fraud.

Cons: Merchants do not have control over the whole user experience as hosted payment gateways are external operators.

  1. Self-hosted payment gateways.Payments are made on the merchants’ websites themselves. Customers enter their payment details which are collected and sent to the payment gateway’s URL. Examples of self-hosted payment gateways are Stripe-powered Shopify Payments and Quickbooks Commerce B2B Payments.

Pros: Merchants control the whole payment experience as all parts of the transactions are completed on the same website.

Cons: If you are operating the website on your own, you would need to have some technical know-how if there are any hiccups on the payment system. This is because technical support might not be available for self-hosted gateways, or you might need to hire technical support help for your website’s payment gateway.

  1. API-hosted payment gateways. Payments are processed using an API (Application Programming Interface) or HTTPS queries after customers enter directly their credit or debit card information on the merchant's checkout page. Stripe API and Square API are examples of API-hosted payment gateways.

Pros: Can be integrated with mobile, tablets, laptops and PCs for a smooth user experience. API gateways also give merchants full control over the user interface and the customer’s shopping experience.

Cons: Additional PCI DSS compliance and purchasing SSL certification requirements for merchants.

  1. Local-bank integration payment gatewaysCustomers are redirected to the payment gateway’s website (the bank’s website) where they enter their payment details. Upon successful payment, the customer is redirected back to the merchant's website and notified with a payment confirmation. For example, eNets in Singapore.

Pros: Quick and easy-to-set up, most ideal for one-time payments.

Cons: User experience is not customizable and usually, local bank gateways offer basic features without the option for returns or recurring payments.

Top Bank Redirects Used In Singapore:

eNets is a Singaporean payment gateway that offers local and international debit and credit card online payment processing. For merchants, eNets offers them a reporting system with daily transaction updates and historical sales records besides an integrated multiple payments solution. It offers loyalty programs and cashback services.

Synonymous with payment gateways, and most accessible to all, PayPal is one of the most technologically advanced payment gateways. It boasts a 377 million strong base of active users and merchants. In a 2020 PayPal-commissioned Nielsen research of U.S. based merchants, PayPal’s customers convert 2.8x more when shopping with merchants who offer PayPal as a payment option. Customers trust PayPal as a secure payment option for them.

  1. Buy Now, Pay Later

Buy now, pay later (BNPL) is a buying on credit payment option for online or in-store shoppers. Payments are split into instalments, usually interest-free unless not paid on time. Where previously the BNPL model was more commonly offered for big-ticket purchases, nowadays retailers are offering this credit payment option for small purchases like cosmetics and apparel too.

Pros of Buy Now, Pay Later payment option: Cons of Buy Now, Pay Later payment option:

1. Access to a wider range of audiences. By offering instalments, buying expensive items are more affordable, especially for the younger demographic.

2. Correspondingly, as a merchant, the average order value increases. Klarna, a Swedish fintech company that offers BNPL, reported that retailers who partnered with Klarna saw an average increase of 68% in AOV with payments in three instalments. Purchase frequency too witnessed a 20% increase or customers choosing to pay in 30 days.

1. Higher fees for customers and merchants. Compared to other payment methods, BNPL systems incur higher fees, generally 2-6% of the amount purchased.

2. BNPL encourages consumer debt. Buy now, pay later encourages consumers to buy more than they can afford, which usually means they do not have the actual means to repay the loans or instalments. Being in debt would affect your shoppers financially, mentally and emotionally

Top BNPL Providers In Singapore:

With Hoolah, customers pay one-third of the item’s price upfront and the rest through interest-free instalment plans. Merchants, however, receive the full payment within 4 days. They could integrate Hoolah on their online stores, e.g. those powered by Shopify, or retail outlets easily.

  • Rely

Rely is a BNPL service offered as a payment option on online stores like Qoo10 and Zalora. For most merchants, there are no interest or fees charged but a one-time administrative fee may be charged for selected merchants. Customers pay a third or a quarter of the full price and the rest in instalments which must be paid for 4 fortnights or over a period of 3 months.

  1. Cash-Based Vouchers

According to Statista, 98% of Singaporeans have a bank account. Furthermore, a 2020 Google survey revealed that one in five adults have a digital-only bank. Although making payments using cash-based vouchers online is not really popular in Singapore as most people have bank accounts, one of the e-commerce websites available here, Qoo10.com, provides cash-based vouchers as an online payment solution.  

Cash-based vouchers allow customers to pay in cash (or card, if they wish) to the ATM, bank, convenience store, or supermarket to complete the payment in cash. Online merchants issue a transaction reference number and/or a scannable voucher that customers use to pay for their purchases in person.

Pros Of Cash-based Vouchers: Cons Of Cash-based Vouchers:

1. Inclusivity. Cash-based vouchers mainly serve the unbanked population, or those without internet banking access. Payment could be done in person at convenience stores (like 7-Eleven stores for Qoo10), or AXS and ATM machines (again, for Qoo10) islandwide in Singapore.

1. Customers could abandon their carts. Customers might forget to make payment completely, or forget to complete their payment in time and their payment reference numbers expired.

2. Payment would be linked to store operating hours.

3. Any network or systems glitches between the grocery or convenience stores or ATM machines and the merchants could affect payments.

Top Cash-based Payment Option In Singapore:

Purchases on Qoo10 could be made via 7-Eleven convenience stores, AXS machines, and ATM machines. For purchases to be paid in 7-Eleven, a barcode will be issued, and customers would need to scan the barcode to complete their payments there.

  1. Cryptocurrencies

Cryptocurrencies are digital tokens, they are not physical coins or cash. It is a decentralised digital currency, with no central authority or government regulating it. Cryptocurrencies are encrypted and secure, and run on peer-to-peer blockchain technology and could be used to buy goods and services or even traded. Tools like a crypto heatmap let you keep track of your digital finances and make better decisions. There is no standard value for cryptocurrencies and the price is set by the market’s demand and supply.

Pros Of Accepting Cryptocurrency Payments Online Cons Of Accepting Cryptocurrency Payments Online

1. Increases conversion rate and user engagement. Triple A estimated that in 2021 there are currently over 300 million crypto users worldwide. Over 18,000 businesses already accept cryptocurrency payments. Giving more options to pay would only improve your business and appeal to more customers to buy from your online store.

2. Eliminating banks and service providers reduces transaction fees for merchants and customers.

3. Secure and fast transactions. Payments are received immediately and do not take days to be processed unlike traditional banks. They are also secure since blockchain technology tracks each individual coin and wallet, eliminating fraud possibilities and limiting chargebacks.

1. Price volatility. Cryptocurrencies price fluctuates rapidly and the value of a crypto coin could halve even in 1 day of trading. Try not to hold cryptocurrencies for your business as it could cost you as a speculative investment. Immediately convert digital currency to its value in cash in real time when payment is made with service providers like BitPay or Coinbase.

2. Security. There are cases of crypto assets being stolen by cybercriminals, and an average of USD $2.7 million of cryptocurrency assets stolen every day in 2018. Regularly back up your data, keep your private keys safe, and turn on multifactor authentication when logging onto your digital wallets.

3. Regulatory Uncertainty. There is no universal law governing cryptocurrency and many countries are coming up with reporting, and taxation regulations and requirements regarding cryptocurrency. Bitcoin, for example, is accepted as a legal payment method in Japan.

Top Cryptocurrency Payment Gateway In Singapore:

Triple A is a cryptocurrency payment gateway that would get merchants access to 200 million new customers worldwide. Triple A is compliant with the Monetary Authority of Singapore with no chargeback and no risk of fraud. Customers could pay in crypto or their local currency and it is compatible with all crypto wallets. Triple A is easy to integrate with platform plugins or APIs, making it a reliable choice for e-wallet app development services.

What Are the Fees Involved?

Costs of accepting payments online vary between different online gateway providers. There are many fees associated with accepting cards and other payment types online. Most payment gateways and merchant accounts charge per transaction, on top of setup fees, monthly and annual fees, minimum transactions fee, and processing fee, among others. The standard transaction fee for online payments could be cheaper for merchants with volume discounts.

In Singapore for example,

  • GrabPay merchants pay a 1% fee on all transactions, plus an 9% Goods and Services Tax (GST).
  • DBS PayLah! charges a 3% transaction fee for credit and debit cards and 2% - 4% for instalment plans. There is also a one-time setup fee of SGD $800 + GST and an annual fee of SGD $1,000 + GST.
  • Singapore-based PayPal merchants accepting payments locally will be charged 3.90% of the total transaction as well as SGD $0.50 fixed fee.

Do check out each payment gateway’s website for more details regarding merchant fees.

With this comprehensive guide, we hope that we have laid out all that you need to know on accepting card payments in Singapore, and all other payment options possible on top of it. Keep track of all your payments and invoices with Osome’s accounting for SMEs in Singapore. Contact us for a no-obligation consultation.

*The GST rate changed to 9% on the 1st January 2024. Learn more here.


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