I get a lot of people asking what is involved in setting up a website to sell online and what costs are involved.

To sell online, you need a website. So there is a cost involved in designing the site itself. That cost varies depending on what you need the site to look like, how many pages you want and a few other things.

Then you will need a shopping cart setup. The shopping cart that we prefer to use is BigCommerce.

What is a shopping cart?

A shopping cart is a software application that typically runs on the computer where your Web site is located (the Web server), and allows your customers to do things such as searching for a product in your store catalog, adding a selected product to a basket, and placing an order for it.
A shopping cart consists of a database of all your products that you sell, a storefront (web pages) that display the products to your customers and an administration area that allows you to manage the products within your store.

You will then have to decide how you want to accept payments, once people have bought items through your shopping cart. A simple way is to accept payments via credit and debit cards is by using a 3rd paty processor such as Paypal or Paymate. Another solution is to use a Payment Gateway.

What is a Payment Gateway?

A very simple way of understanding exactly what a Payment Gateway does, is to imagine going to the service station and paying for petrol with your credit card. You swipe your credit card through the little machine, the software on the swiping machine then processes the transaction on behalf of the service station and notifies the service station man whether the transaction was approved or not. So, a Payment Gateway is the software that processes the transaction on behalf of the Bank.

In the long run, using a Payment Gateway is much more cost effective than using a 3rd party processor such as PayPal but there is a lot more involved in setting this up.
When using a Payment Gateway there are certain fees, we recommend using eWay and following are their fees at the time of writing this:

• Budget Plan: $350 per year; $0.50 per transaction.
• VIP Plan: $750 per year; $0.25 per transaction and 300 free transactions per month
• Premium Plan: $2000 per year; $0.22 per transaction and 1000 free transactions per month

Once you have a Payment Gateway, you will need a Merchant Account with a Bank to interact with the Payment Gateway. This is where your money will go into once payments have been processed by the Payment Gateway.

What is a Merchant Account?

In order to use a Payment Gateway in Australia you will be required to establish a merchant account with a Bank. There are several types of merchant accounts that Australian Banks offer so it’s important to note that you will be looking for an Online Merchant Account to use with a Third Party Payment Gateway.
Once you have established a merchant account you simply pass this information to your Payment Gateway and you will be able to accept payments online.

Banks charge have fees involved in setting up and using a Merchant Account, at the time of writing this, National Australia Bank was charging the following:

• Establishment: $80
• Monthly: $7
• Annual: $28
• Transaction Fee: 0.8% – 2% per transaction which is negotiable depending on volume

So in conclusion, to run a small to medium e-commerce store selling under 500 products, it could cost around $85 a month to run plus per-transaction fees.