What an online store needs before it can take payments

If you are wondering how to start an online store, begin with the decisions that only you can make. Before a store can take a payment, you need to know what you sell, what you charge, how it reaches the customer and how the money reaches you. The technology can wait until those are settled.

In short: an online store needs four decisions from you before it can take payments: what you sell, what you charge, how you deliver and how you get paid. One South African payment provider's guide says providers must verify who they work with first.

How do online stores work?

An online store shows your products, lets a customer choose them and pay, and then passes the order to you to deliver. Each of those steps needs a decision from you. Our earlier piece, Before you order a website: six things to decide first, says that a store has to deal with stock, prices, delivery and payment, and that each of those needs a decision from you. You do not need to know how it works inside. You need to know how you want it to work for your customer. A store that cannot take a payment is only a catalogue.

What is an online store business?

An online store business is a business that sells products through a website and takes payment there. The website is the shop window. Everything behind it is still ordinary business: you buy or make stock, you set prices, you pack, you deliver and you deal with problems. That is why the first questions are about your business, not about software. If you can answer them in plain words, a builder can work from your answers.

What will you sell?

Decide exactly which products go in the store at the start. A small range that you can describe well is easier to look after than a long list you cannot keep up with. For each product, write down what it is, what it looks like, how much you have and what a customer needs to know before buying. Decide what happens when something runs out and how you will tell the customer.

What will you charge?

Set a price for every product before the store is built. A price is more than the number on the label. Think about what the product costs you, the packaging, the fees you pay to take a payment and the cost of delivery. Then decide whether delivery is charged separately or built into the price. Whatever you choose, make the full amount clear to the customer before they pay.

How will it reach the customer?

Choose how orders get to customers and what you will tell them about it. Decide where you deliver, who carries the parcel, who packs it and who pays for it. Decide whether customers may collect in person. Then decide what happens when something is returned or does not arrive. Write these answers down in plain sentences, because customers will want to read them before they buy.

How will you get paid?

A payment provider is the service that takes the customer's payment and passes the money on to your bank account. You will need to choose one.

A published guide from a South African payment provider says that payment providers are required to verify who they work with before a business can accept payments online. For a sole proprietor, the same guide lists a valid South African identity document or passport, proof of address and a bank confirmation letter or statement. For a registered company, it lists company registration documents, proof of business address, bank account confirmation and identity documents for all directors.

Have these ready early. Which provider suits you, and what it charges, is your decision. Ask for the terms in writing.

What do you have to show customers?

The Electronic Communications and Transactions Act says a supplier offering goods by way of an electronic transaction must make certain information available on its website. Among other items, that includes the full price, including transport costs, taxes and any other fees, the manner of payment, the time within which the goods will be dispatched or delivered, and the return, exchange and refund policy. The Act says the supplier must also provide further items, such as its full name, its contact details and, for a company, its company registration details. The Act says the supplier must provide more items than the ones named here. The Act also says the supplier must use a payment system that is sufficiently secure for the type of transaction. These are further reasons to settle your prices, delivery and returns before anyone builds the store.

Where to start

Take one page and write four headings: products, prices, delivery and payment. Under each, write what you have decided and what you have not. The gaps are the questions to bring to whoever builds your store. A builder can explain technology in plain words, but only you can decide what you sell, what you charge, how it travels and how you are paid.

There is a page about building online stores if you want more detail.

This is general information, not legal advice.

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