E-Commerce For You

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By Zulf Choudhary of

Content1.About Us2.The Market3.The Solution- Ecommerce4.Getting Started5.Building Blocks Of Success6.The Key Factors7.Financial Risks8.Risk Calculations9.mCommerce10.Types Of Payment Providers11.Actual Costs12.Other Factors13.Conclusion14.Appendix List

• Founded in 2005 University of Manchester

• 7 key staff for project and IT development in UK

• Public sector & technology delivery partners

• FSA regulated to issue e-money

• Custom and Excise Licensed Money Transfer Agent

• Key Strategic Partners

• Software outsourcing offices in China 45 staff

About SpartaPay

BSC Finalist 2008 In 2 Categories

Best EEC Project Winner 2007

Finalist 2005Orange Finalist 2009 In 2 Categories

The MarketThe internet has changed consumer buying behaviour; what, when and how they pay. Merchants must react to these changes or fail. Some Facts:

•£89.6bn was spent online during 2010 (IMRG, January 2011)

•By the end of 201,1 32m UK consumers will be shopping online. The value of goods they buy online in 2011 will add up to almost £52bn. (Forrester, UK eCommerce Forecast 2006-2011, March 2007)

•Over 3.5 million people bought online on Christmas day in 2009! (BMRB, Feb 2009)

•Juniper: Mobile Application Market Worth £18billion world wide *•App sales-firm Gartner, mobile app sales topped $5.2bn last year, but this year that number will leap to $15.1bn. •Gartner sees that figure growing exponentially to 185bn

Source: http://www.iabuk.net/en/1/iabknowledgebankaudiencefactsandfigures.html*http://www.atelier.net/articles/juniper-mobile-application-market-worth-25b-2014

The secret: Know your customers!!!

The Solution That Is Ideal For youThis depends on a number of factors:

•Customer segment•Your product•Buyer behaviour•Bank charges and costs•How traffic is driven by your marketing•How to get them to Pay?

Source: http://www.iabuk.net/en/1/iabknowledgebankaudiencefactsandfigures.html*http://www.atelier.net/articles/juniper-mobile-application-market-worth-25b-2014

The secret: Know your customers!!!

The Solution-ecommerceElectronic commerce, commonly known as e-commerce or eCommerce, or e-business consists of the buying and selling of products or services over electronic systems such as the Internet and other networks.

Online Examples:

1.Amazon-book store2.Dell-computer systems3.EBay-exchange market place4.PayPal-online payments5.Apple

Mobile Examples:

1.Traffic panic2.Angry Birds3.Paddy Power

Getting Started

1. Apply for a merchant account. This is an account set up with a bank to process credit card orders from customers (or via Payment Service Provider -PSP).

2. Negotiate the costs with bank or PSP.3. Receive access to secure software (PDQ machine-(Payment Documents

Quickly) or codes to put your website to process cards.4. Done!5. DIY or get someone to do it for you?6. What channel to you –website, mobile, store or all.

Options-and costs

1. Apply Directly- Fees, contracts, shopping trolley, secure transactions area etc.2. Apply via PSP-They will provide this for you- Buck Net, PayPal, WorldPay etc3. Joining a shopping mall. eBay, iTunes, OVI, etc

Merchant Accounts

Direct Merchant Indirect Merchant

Low Cost/Flexible High Cost/ Inflexible

Building Blocks For Success!

Buyers Bank-the issuer

Merchants Bank-the acquirer

Internet Order forms & Shopping cart

Secure Area for cards data SSL

EPos Fulfilment & Logistics

Accounts and management of

e-commerce

SECURE DATA EXCHANGE by VISA or MasterCard

Terms & Conditions

Website/Mobile App/ Retail

How Ecommerce Works-payments part

Financial Risk

A bank looks at their exposure to risks to you and your customers before agreeing to give you a online account. Why?

• Fraud and charge backs = cost of doing online business with you.• A look at charge-backs – when a customer demands a refund from their credit card company.• Banks protect themselves against charge-backs by retaining customer payments for around a month before crediting your account• Internet transactions can be prone to fraud.• You may need to lodge a bond to cover yourself against fraud.• Good terms and conditions on your website will help.

In perspective: Fraud represents only 15 to 30 minutes of loss in a full year of trading for many banks. So why concerned?- Brand Reputations

Risk CalculationsExposure is the acquiring bank estimate of the total risk you are exposed to at any one time; for instance, the number of sales open to refund over a given period. Your exposure level will also affect the charge bands offered to your business, i.e. monthly charges and transaction charges. Risk factors

1.Charge-backs – the risk of refunds on your merchant account;2.Forecast turnover figures – higher turnover can generate higher exposure;3.Average transaction size – if you sell very high value items (diamonds, cars) this will influence the risk profile of your business;4.Time from payment to order fulfilment – The longer it takes to dispatch goods to a customer, the greater the risk of an order cancellation;5.Length of trading record – a start-up company presents more risk than a well established business;6.Business sector classification – different sectors have more or less risk associated with them (CDs can be resold but a flight needs the purchaser to turn up in person). Some banks have over 700 different business sector classifications. 7.Safeguards you have in place – security checks like verifying address details or phoning customers who place large or repeated orders will reduce the perceived risk to the bank and you.

Setting Up Ecommerce Systems

•Channels to marketWebsiteStoreSMS MobileSocial WebsitesPoster and PR campaignsApp stores

•CostsEach channel above has a costSoftware off the shelf or bespoke?Can you pay for all or just one channel? Costs vary from a £250 to £10,000,000! (Facebook cost £6m) In house or outsourced expertise?Who manages the complexityRisks of system failure or parts

Before starting consider how will you drive traffic (buyers) to your site?

mCommerceCollecting Payments via mobiles-just a summary

Has its own risks

• Mobile provider gateways and shopping malls -iTunes, OVI etc• Reverse Billing-cost to your mobile account-BT• Mobile banking-Banks• eticketing via SMS, concerts, travel etc.• Premium rate lines- adults, gambling- all telecom companies• Mobile Payments fees 15% to 30% per transaction

Why?

Because of:

•Convenience•Simplicity•Direct into hand-SMS

Types Of Providers-ExamplesCredit & Debit Bureau Provide Extras

Bucks Net Payment Gateway Shopping cart, reports etc WorldPay Payment Gateway Shopping cart, reports etc

PayPal Payment Gateway Shopping cart, reports etcNetbanx Payment Gateway Shopping cart, reports etc

Merchant account providers- Streamline Merchant ID - Major Banks Merchant ID

Mobile- Apple Inc Mobile bureau service- Ovi Store Nokia devices

- Pay2Go Mobile design for e-commerce

Postal OrdersBanks/Post Off Cheques and postal orders

Cash- PayPoint Cash collection for bills- PayZone Cash collection for bills

Shopping carts etcWeb design and shopping cart providers (Actinic etc, OS Commerce) etc

Actual Costs

Example of costs

Set-up Recurring Costs Charges

Bank Acquiring £200 £10 2% - 3.35% per credit card transaction £0.25 - £0.35 per debit card transaction

NetBanx PSP £75 £10 from 1% to 4% per transaction

Worldpay £200 £360 (annual) 4.5% credit cards, £0.50 debit cards

Main costs are listed below but are not relevant to all products

• Setup Cost: ranges between £50 and £250, i£120 is the average.• Annual Cost: normally around £150 but often not applicable.• Monthly: The most standard charge especially from acquiring banks, around £10-25 pm.• PSP: Can be a commission of as little as 1% but often about £10 per month or 3-4%.• Transaction Charge: 2.79% for an established business but up to 4-7% otherwise.• Bond: dependant on exposure level but is often negotiated down.• Charge back £7 to £29 for each item• Mobile Payments fees 5% to 30% per transaction

Other Factors

•Website design-clear and direct guide to buying page!

•User experience-MAKE IT SIMPLE STUPID!

•Users convenience-make it easy

•Marketing and PR

•Quality of Service and sense of community (use social media to drive traffic!)

•Design-simple to use and well designed-guide users to buying area!

What sets you apart from others? What is your unique selling point in the view of your customers? How do you stand out!

Examples: Call of Duty Game, iPhone, Amazon, Tesco, Micro Direct etc. Look at how others have done it.

Its all about good design and user experience- remember a good ecommerce business is orchestra of many parts!

ConclusionElectronic commerce is about online selling, taking users to a place they feel secure and happy to buy goods or service.

Many issues and challenges can trip the unwary but if you think rationally and positively you could make millions.

Consider the following:

- Online and mobile channels (do not forget that TV, radio and newspapers all depend on e- commerce of one type or another!)- Look at your budget.- Look at all the risks.- Decide on payment gateway provider.- Look at the at total user experience with you.- Negotiate the best deal from your payment package.- The set-up costs may been high and the work daunting but its worth it.

The market is worth over £15 billion now and £185 billion in 2014!

Good Luck in 2011

Thank you for listening

If you have any questions please contact meZulf Choudhary

Telephone: 0161 306 5848

Email: info@spartasoft.co.uk

Address: SpartaSoftUniversity of ManchesterArch 29, PO Box 88Sackville Street www.spartasoft.co.uk

Appendix-List of Services Providers

Name AddressAllopass http://www.allopass.com/ukBuck.net http://bucks.net/ChronoPay Bureau http://www.chronopay.com/DataCash http://www.datacash.com/ePDQ Barclays bank http://www.barclaycard.co.uk/business/Moneybookers LTD http://www.moneybookers.com/app/Netbanx http://www1.netbanx.com/NoChex http://www.nochex.com/PayPal http://www.paypal.co.uk/ukPayPoint http://www.paypoint.co.uk/PO MoneyGram http://www.postoffice.co.uk/Splash plastic card http://www.splashplastic.com/Streamline http://www.streamline.com/SecureTrading Merchant Account http://www.securetrading.com/SecPay-owned by PayPoint http://www.paypoint.net/secpay-payment-gateway/RBS WorldPay http://www.rbsworldpay.com/Apple-mobile http://www.apple.comOvi Store-mobile https://store.ovi.com/Icon-mobile http://www.iconmobile.com/Source http://www.electronic-payments.co.uk/solutions/

This is not an exclusive list-please search the web for more providers