A really good article about Merchant Accounts and Payment Gateways


For anyone who wants to take credit cards over the web without going through PayPal.



Additionally, here are some notes on research I’ve done on the topic for local users.


As promised, more information about payment options.

First lets distinguish between a Merchant Accountand a Payment Gateway.

If your business wants to take credit card payments, you must set up a merchant accountthrough a bank. That merchant accountis linked to your business’s bank account and the money from credit card sale are put directly into that bank account. So you need a Merchant Account if you are taking any sort of credit card payments, not just online ones.

Payment gatewaysare different from merchant accounts. A payment gateway is a secure process used to manage the online transaction. You only need a payment gateway to process the credit cards through your merchant account if you are trading ONLINE. So online shops need both. There are both automated and manual payment gateways.

What happens?

The payment gateway collects the credit card information from the customer, encrypts it and transmits it to the business’s merchant account for authorization. The merchant account then deposits the funds from the sale into the business’s bank account.

The merchant account charges the customer’s credit card immediately when it gets the data from the payment gateway. The money will be deposited into the business’s bank account in a few days.

There are some services such as Paypal and 2Checkout that provide both a payment gateway and a merchant account. Others assume that you already have a Merchant Account, and just need the Payment Gateway.

OK, now that we’ve talked about that …

The two really simple options

1 Paypal

Pros – this is a zero setup fee, zero monthly fee option. You don’t need a merchant account, and pay for their service via a fee on top of each transaction. You can read more about PayPal fees here.

Cons – not all users like to sign in to Paypal, or may have forgotten their password. PayPal has the utterly infuriatinghabit of demanding that users with a PayPal profile log in before they can use a credit card linked to a profile. Not everyone can remember their PayPal account password, resulting in abandoned sales.

Additionally, in my experience dealing with PayPal customer service is also enough to make root canal sound like a fun day out.

However, it is a quick and easy way to get your website off the ground and gives you time to decide if you want to spend the additional money to get an online payment gateway.

On thing which will make the whole Paypal process less painful …

Log into your PayPal business account

Choose Profile (click on the word Profile – you won’t find the option under the drop downs)

Choose My selling tools

Go to Website (Payment) preferences

Scroll down and set PayPal Account Optional to ON

Save that change

Doing this means that new users who haven’t been rash enough to create an PayPal account (and are therefore not forced ever after to use it) can pay using a credit card via PayPal without creating a PayPal profile.

2 Continue to manually process Credit Card transactions.
Set up a “We will call phone you to get your credit card details” payment option

Pros: No additional fees if you already have the ability to take credit cards – this approach works well if you already have a merchant account/eftpos machine, and you can call the user and plug the credit card details into your eftpos machine as a MOTO transaction.

Caters for users who don’t want to enter credit cards online.

A phone call is a nice way to make contact with buyers, find out how they heard about you, do some upselling, and generally breed brand loyalty.

Cons: more labour intensive. You may end up playing phone tag a lot.

You should check with your bank that your merchant account is set up to allow you to process transactions without viewing the card – you may need to get it updated.

How to do it? Go to:

Preferences / Checkout & payment / Offline & Custom Payment Methods/

Under that drop down choose ‘Create a custom payment method’.

Give it a name like “We will call you for your credit card details”, with instructions like “Please include a daytime phone number in your checkout details so we can call you to process your credit card details”.

Click [Activate]


When you’ve decided that you are making enough sales to justify the ongoing cost of an online payment gateway, you can easily add the ability to take credit cards directly.

Here is a list of payment gateways supported by Shopify

Of those the Australian ones are:

PayPal (described above) – which has the advantage of not requiring a Merchant Account.

eWay$0.50 / transaction,$350 p/y (plus cc fees on top)

Netregistry – $50 setup fee + $55 per month

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