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Accepting payments online is a big draw for customers shopping online. A large part of this convenience is the variety of online payment options available. Fortunately, choosing an online payment service for your business to accept payments online is relatively flexible. However, this makes it all the more important to do your research. Finding a payment portal that both suits your needs and complies with New Zealand law can be simple. This article will touch on some legal requirements to consider when collecting payments online. It will then provide a brief explanation of your online payment options.

Your Responsibility for Customer Security

When trading online, you have various legal obligations you need to meet, just as a physical business would. These include various consumer law requirements and rules around how you must engage fairly with your customers. 

The Privacy Act protects your customers’ privacy, which is particularly relevant when accepting online payments. When you process a customer’s financial details online, you are dealing with sensitive and personal information. You need to ensure you collect this information securely and do not give that information to a third party without your customers’ consent. 

If there is a privacy or security breach and a malicious third party gets a hold of this financial information, you will face significant reputational losses. If you are found to be negligent at all in maintaining adequate security, you may also face severe legal consequences.

Secure Online Payment Services

A payment gateway or off the shelf online payment service should ensure your customers’ payment details are secure when completing an online transaction. However, ensure you are aware of how they protect your customers so that you can be confident their privacy is safe. If you manage any payment acceptance software yourself, then this is even more important. If you decide to use a custom payment portal, it is your responsibility to ensure the software is secure enough to meet your legal obligations. Any online payment service should be encrypted and hold any relevant security certificates.

Tip: Develop a response strategy for dealing with data breaches or online payment issues at your business. If you have a guide to follow when a security crisis occurs, this can alleviate a lot of hassle.

Planning for Accepting Payments Online

Whether you are setting up a new eCommerce business or adding an online payment option for your physical storefront, start planning for how you will accept online payments early. Think about what you are going to use it for and what options you will offer your customers. Are you adding an online shopping cart function for your already existing website for your physical store, or are you solely operating online from an eCommerce platform? Your intentions will influence what options you choose. 

In New Zealand, customers will commonly pay with:

  • their credit or debit card; or
  • a direct bank transfer.

Accepting Credit Cards

If you want to accept credit or debit card payments online, you will need to open up a merchant account with your bank. If you operate a physical store that already accepts card payments, you will likely already have one. However, if you are solely operating online, you will need to start this process. Your bank will have its own fees and rules attached to this merchant service, so work together with them to find an option suitable for your business.

You will likely accept customers’ credit card details through a payment gateway, such as Windcave or Stripe who will handle the practical functioning of accepting online payments. Your bank will likely have a list of payment gateways they support, so choose one that will suit you. If you are using an off the shelf eCommerce platform like Shopify, they will have their own payment options for you.

Tip: No matter what you choose, make sure your chosen gateway is PCI DSS compliant. This is a worldwide standard for accepting credit card payments meant to tackle fraud and criminal action.

Accepting Direct Bank Transfers

Alternatively, if customers do not have a credit or debit card, they could pay you directly using their internet banking service. This may be difficult to manage as your business grows, and you have to give the customer your bank details for the transaction. However, third-party systems like POLi offer secure and streamlined direct transfer services for businesses, so look into what works for you.

Key Takeaways

As the eCommerce industry grows in New Zealand, your options for accepting customers’ payments online are continually growing. Your bank will have resources you can use for choosing a payment method that suits your business, so they should be your first port of call. Otherwise, ensure you beg planning for online payment early on and do your research. If you would like more information or guidance around accepting payments online, contact LegalVision’s New Zealand online business lawyers on 0800 005 570 or fill out the form on this page.

Frequently Asked Questions

What is encryption?

Encryption refers to a process that encodes information for security online. It makes a set of information look like random data, which can only be understood if you have a key to the code.

How can I accept payments online for my business?

Online payment options are growing, but two of the most common ways are through credit/debit card payments or direct bank transfers. Certain third-party companies offer these, which your bank may support.

Am I responsible for making sure my online payment options are secure?

Even if you are using an off-the-shelf payment gateway, you should take steps to ensure it is secure. Read through their terms and conditions and security descriptions.

What online payment option should I choose?

Do your research and find an online payment option that suits your business. Which one you choose will depend on what you use it for. For example, if you offer a recurring service to your customers the online payment system you choose would need to support regular direct debit transactions.

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