Ecommerce Ingredient List: 9 – Bank Account

This series of articles – ‘Ingredients for Ecommerce Success‘ was inspired by the early days of the effects of COVID-19, with people forced to find alternative sources of income and companies needing to get online to maintain some orders and sales. Some of the articles are aimed at people who are new to ecommerce – like this one. 

There is no Online Shopping without Online Banking

While there are some markets where cash on delivery is still common, the advantages of ecommerce over traditional forms is that you can accept orders online, with payment . In order to do that, you will need a payment gateway – more on those later in the series – and you will need a bank account – with a debit or credit card attached.

Think about the implications of the currency of your bank account. Depending on where you shop is located, where you are based and where your customers are, there may be costs and issues associated with foreign exchange rates and conversions.

You May Need a Company and a Company Bank Account.

In some countries, you will need a company registration or business license in order to sell goods and services online – especially if you are delivering those goods physically to addresses within certain markets.

While ecommerce platforms like Shopify like to promote the empowerment of entrepreneurs and side-hustle style businesses, this is a very western mentality – if you are in markets like Australia, the US and UK – its possible to run your online shop as an individual, trading under another name – however in many countries this is not possible under local laws and regulations.

PLEASE CONSULT AN EXPERT WHO UNDERSTANDS THE LAW OF THE MARKET THAT YOU PLAN TO BASE YOUR ONLINE SHOP.

Running an online store as a company has many implications including tax, liability, regulations and costs.

From a bank account point of view, business banking accounts are more expensive than personal accounts. Many have minimum balance conditions and many charge fees that are not always obvious. So read the fine print.

For example, moving money out of PayPal into a business bank account may be subject to extra fees in some markets.

Not only will your online shop require a bank account to accept money into, you will also need to pay for tools, apps and advertising using a debit or credit card.

Yes. You will need to spend some money, and SaaS products do a very good job of taking that money out of your account every month, often with no SLA or guarantee of results.

Online Wallets and New Forms of Payment

Getting a bank account is getting easier. The rise of FinTech start-ups and disruptive models are changing they way money changes hands. In places like the UK, apps like Revolut allow customers to have virtual debit cards without much of the red-tape and paperwork required by banks.

Again, many of these advances and changes are not available in emerging markets, so please check your local regulations.

Also a word of warning. Old-school banks are protected by laws in many places that force them to protect money. Many of the FinTech opens could be more risky. Your account could be frozen, the company could dissapear with all your cash – so be careful.