Online payment processing for South African e-commerce websites
Published Apr 2010
UPDATE: This article is dated. Please read our updated article on South African payment processing gateways.
UPDATE: PayPal have launched in South Africa. This probably makes them the best payment processing option, especially if you are selling to an international audience. The only requirement is that you need an FNB bank account (if you don’t have one you can open a new account online easily).
With the growing penetration of broadband in South Africa, more and more people are migrating online. This will inevitably lead to a rise in online transactions. We review some of the options available to South African websites for accepting payments online.
If you run an e-commerce website or online service and want to accept credit card payments online, you need an account with an online payment gateway. They will take the payment details, verify it with the credit card company, and then process the payment. The money sits in your account with the payment gateway and you can transfer it out to your bank account whenever you want.
If you already accept credit card payments in your physical store, the application process is easier since you already have a credit card merchant account. You now just need to apply for an online merchant account with the payment gateway that your bank uses.
How online payments work
There are typically two different services that the payment gateway will offer:
- Option 1: A user shops on your online store. When the user is ready to check out he gets redirected to the payment gateway site to enter his credit card details. They process the payment and send the user back to your website. You do not store any credit card details.
- Option 2: A user shops on your online store. When the user is ready to check out he pays on your website. In the background you store his credit card details and query the payment gateway. They send a response accepting or rejecting the payment. Then you finish off the transaction.
We never advise our clients to capture or store any credit cards on their sites. This is too much of a security risk. We always advise clients to choose Option 1.
All payment gateways will accept credit cards or Mastercard and Visa cheque cards. Debit cards (which require a PIN number) can not be used for online payments at present.
Which payment gateway to choose
I have listed below the various South African payment gateways we have used for the websites that we have designed and developed in the past. Please note that the fees listed are not 100% accurate. Vendors sometimes do not list pricing on their sites and the fees are always subject to change.
- Website: www.paygate.co.za
- Service to ask for: PayWeb or PayXML(WEB)
- Comments: Paygate requires a merchant account with Standard Bank. Use them if you bank with Standard Bank or you already have a Standard Bank merchant account.
- Fees: No Setup fee. Minimum monthly fee: R 185.00 or R1.00 / transaction
- Website: www.iveri.co.za
- Service to ask for: iVeri Enterprise or iVeri Lite
- Comments: This is Netbank’s payment gateway. If you have a Nedbank merchant account, use them.
- Fees: Unknown
VCS – Virtual Card Services
- Website: www.vcs.co.za
- Service to ask for: Virtual Online or Virtual Merchant
- Comments: If you are already an ABSA or FNB customer, this is the payment gateway to use.
- Fees: Authorizations R1 / transaction + 0.5% of the value of each transaction. Monthly Minimum of R125.00
- Website: www.netcash.co.za
- Service to ask for: Netcash gateway
- Comments: Netcash is a super merchant so there is no need for a merchant account. They will process your transactions via their merchant account.
- Fees: R 1.00 per transaction and (4.5% to 5%) commission based on transaction values.
- Website: www.setcom.co.za
- Service to ask for: Buy Now Buttons or Checkout Buttons
- Comments: Setcom are also a super-merchant so no merchant account is required. Your users will have to register on the Setcom site first before they can submit their payment. This can make the checkout process very cumbersome. Test the checkout process first before you choose them.
- Fees: No monthly fees. Transaction fee: 4.9% + R4.00 / transaction
If you use a South African payment gateway your charges will be processed in South African Rands. International users are probably going to be deterred by this. The ideal solution would be to use an international payment gateway and accept payment in the user’s local currency. However, the South African banking and forex regulatory environment makes this impossible.
- Website: www.paypal.com
- Comments: Most international websites use PayPal to accept online payments. Unfortunately, PayPal does not accept South African merchants. You can open an account using an international address. However, you will NOT be able to transfer funds into your South African bank account. PayPal is only an option if you have access to an international bank account. Hopefully this will change soon.
- Website: www.2checkout.com
- Comments: This international payment gateway claims that you can get money into your local South African account. The one downside is that 2checkout requires you to create a catalog of products in their system. You can’t just pass an amount to bill.