The first step before you talk about using credit cards on the internet is to find out whether you and your business will be acceptable to transact business by credit card. There are two types of transactions: ‘over the counter trading’ when the customer is present and ‘card not present’ transactions. In the latter, the risk of fraud and mistakes is increased and so your business will be subject to a risk assessment before being authorised for credit card transactions.

As a start-up, you may be viewed with some hesitation. One bank, for example, will not consider you until your business has been trading for a year and can present the first year of accounts. One of the other banks will make a risk assessment, as long as you are one of their customers, and will look at your management history and type of business before reaching a firm conclusion.

There are also costs associated with using credit cards and generally speaking it is reckoned that the minimum transaction to make the credit card facility economic is £10. So your £5 product might render the whole exercise questionable.

Finally, the banks vary in their attitude to business over the internet. However, for example, both Natwest and Barclays will in principle accept a business carrying out transactions over the net, as long as your system meets the minimum security requirements. Natwest would refer you to a payment solution provider which would provide a secure environment to prevent fraud and hacking. Barclays has set up Barclays Merchant Services which has put in place the minimum security requirement need to receive and make payments by card across the internet.

See also: Use credit cards safely