OVERVIEW OF ONLINE PAYMENT TYPES

The online* payment types which can be accepted are continually growing in number and generally mirror offline types of payment.

The main online payment types orientate around card payments and Direct Debit payments which are outlined below:

ONLINE DEBIT CARD PAYMENTS

Debit card payments can be accepted online and used for real-time, card scheme permitting, subscription and recurring billing. Debit cards are typically linked directly to the cardholder's bank account and payments are authorised only if the funds are actually available or if your card issuer is happy to provide you with an overdraft (unlike credit cards - see below).

Debit card payments online typically require authentication using the 3D Secure authentication process, although this depends on the implementation being supported by the card issuer.

The primary debit card brands used in the UK are Visa and Maestro (being replaced by MasterCard Debit).

ONLINE CREDIT CARD PAYMENTS

Credit card payments can be accepted online in the same way as debit cards, i.e. in real-time, and these typically can be used for subscription and recurring billing without any restrictions. Credit cards are a form of borrowing where the card issuer is in effect allowing their cardholder to "borrow" money in line with a credit agreement (in the UK these need to be licensed by the Office of Fair Trading (OFT) under The Consumer Credit Act 1974). Therefore, the amount of funds available isn't linked to the customer's bank account but based on their agreed credit limit and how much of this is available to spend.

Credit card payments online typically require authentication using the 3D Secure authentication process, although this depends on the implementation being supported by the card issuer.

The primary credit card brands used in the UK are Visa and MasterCard.

ONLINE CHARGE CARD PAYMENTS

Typically charge card payments are treated in a similar way to credit card payments but typically transactions are processed directly through the card issuer.

The principal charge card brand used in the UK is American Express.

PAYPAL PAYMENTS

PayPal is becoming increasingly popular, especially for lower value transactions, and is seeing significant growth in its user base and market share of transactions.

WPM Education has a partnership with PayPal to provide education clients with preferential rates for PayPal transactions.

ONLINE DIRECT DEBITS (ALSO KNOWN AS PAPERLESS DIRECT DEBITS)

Direct Debits are historically popular in sectors where there is a requirement for longer term billing or, in the education sector, where larger values (e.g. fees) are paid over agreed instalments.

Paperless Direct Debits can be set up by a payer online and payments are then collected through the BACS system (unfortunately not in real-time as they fall within this traditional BACS processing process).

OTHER ONLINE PAYMENT TYPES

There are other online payment types, albeit these typically have a very small market share and generally are a better fit for niche applications (e.g. mobile billing).


*When referring to online we mean payments which can be set up and managed via the web which a customer, or administrator, can access using a web browser (or similar technology).

Note: To accept payments online you will need to have a merchant account through an acquiring bank and be sponsored as an originator by your bank for Direct Debits.