Ecommerce Payment Processing
If you’re reading this, chances are you’ve created an eCommerce store for your products and want to start accepting money online. With the digitalization of virtually everything, online and contactless payment has become the thing of the day.
So much so that as per the data released by the Federal Reserve Bank of Atlanta, in 2020, American consumers made 35 payments a month on average, over half of which were made via credit, debit, and prepaid cards.
This speaks volumes about the influence of online payments and why you should link up with a payment processor to have a thriving online business. However, before you begin monetizing your eCommerce platform, it’s best to understand the concept of eCommerce payment processing, something that has made the lives of countless merchants simpler.
Before choosing an eCommerce payment processor, contact our team at CashDiscountProgram.com today. We have helped hundreds of online businesses navigate the market and get set up so that their business gets paid on time, with minimal to no monthly fees.
What is E-commerce Payment Processing?
An eCommerce payment processor is a bridge between the bank and the merchant. They are the chief financial body that controls a variety of online transactions within your business. Without the green signal of the processor, no payment could become successful.
The payment processor task includes verifying with the bank the customer’s balance, seeing if there are adequate funds to complete the transaction and that their card is valid when it is swiped at a credit card terminal.
Following this, the processor authorizes the payment, and the transaction becomes successful through direct debit. The payment processor also performs many vital functions, such as ensuring the security of your payments and making sure they comply with the PCI rules and standards.
What is a Payment Gateway?
When you begin to sell online and receive payments via credit card network or debit cards through your eCommerce site, the payment gateway would be the mediator between your store and the processor.
Payment gateways can help us in numerous ways. With a payment gateway, you won’t be required to worry about the security of the payment. The eCommerce industry is extremely prone to hacking since a cache of sensitive information is stored on such platforms. This is where a payment gateway can make things easier for both you and your customers.
It ensures that all the transactions are completed without being intercepted by potential hackers along the way through encryption. Its job comes to an end when the payment and shipping information is sent to the payment processor. Payment Gateway also provides excellent integration. Its easy integration with platforms like Shopify and Magento stands witness to it.
Moreover, these gateways work 24/7, and you don’t have to be physically present in front of a device to see that the payment is successful. In addition to this, it also accepts the local and foreign currency. If you have any plans to expand overseas, a payment gateway would help make that happen.
What are Payment Processors?
Payment Processors authorize payments during the payment processing phase by verifying the bank account details of the customer before they collect payments. Payment Processors connect the payment gateway with the merchant accounts or the merchant’s bank.
The information is passed on through the payment processor between the two while keeping the data secure from prying eyes. Once the authorization is complete, the payment processor deposits the amount to the merchant account and finishes the transaction.
What are Merchant Accounts?
Merchant accounts are where a customer’s credit card transaction gets deposited after a sale. If you own an online store, you could open a merchant’s account and receive your customer’s money in a secure and seamless manner.
The account would help you accept payments via debit or credit card and even help you manage payments. Once the processor gives a green signal, the funds from a credit card transaction are moved into the merchant’s checking account.
As a business owner, once you set up your checking account with the financial institution or bank of your choice, our team at CashDiscountProgram.com will link your credit card merchant account directly to your account.
The payment gateways used for accepting payments could also be classified into four categories –
- Hosted Payment Gateway
- Self-hosted Payment Gateway
- API Hosted Payment Gateway
- Local Bank Integration
Each payment gateway has its own set of advantages and disadvantages to offer during the payment processing phase. For instance, hosted payment gateway protects against customer fraud since these gateways are secure and comply with the standards laid forth by PCI.
Such a gateway is also customized. However, many merchants avoid hosted gateway since they cannot control the user experience in its entirety and thus, experience a certain degree of constraint. Paypal payments are an example of this. On the other hand, a self-hosted gateway provides a better customer experience, as the entire transaction could be completed in just one place.
The huge disadvantage of a self-hosted payment gateway is that there is next to no support from a professional tech support team if there is an error or a glitch in the system. This will leave you to your own devices if the payment system experiences a failure.
How Payment Processing Works
While for a customer, paying on an eCommerce site for a product or service during eCommerce transactions is a matter of just a few seconds, a lot goes on in the background for the payment to get a green signal.
The customer’s money goes through a series of steps before it reaches the business owner’s account. Here are three components that work together to make a transaction successful.
Payment Gateways
The online portal directs you from the checkout page that connects your eCommerce website and your payment processing company. Here, the customer is required to enter their payment details.
Payment Processor
The payment processor receives payment details and bank information from the gateway and requests to process the payment and check for fraudulent activity. If everything is fine, it then transfers money from your customer’s account to your merchant account, which could be transferred to your account as and when needed.
Merchant Account
Merchant accounts are set up so that business owners can accept payment with credit and debit cards. This account is where funds paid by your customer, whether online or in-person, gets deposited.
For an eCommerce store to safely receive online payments, the three components of payment processing always work together. Let’s look at each element of the payment systems in detail and how they work together to finish the checkout process.
How do Ecommerce Payment Processors, Gateways, and Merchant Accounts Work in Tandem?
Payment processing is a multiple-step process, even if it looks like a click-and-pay job to a customer. For a transaction to become successful, the following events occur in the backdrop.
Step 1: The customer is asked to enter their debit or credit card details while paying for a product or a service.
Step 2: The information that the customer enters is secured by the payment gateway, then to the big boss, the payment processor.
Step 3: The job of the payment processor, as we mentioned, is to check that all the information entered by the customer is legit, including their card number, its validity, and if the bank account has enough funds to accept payments online. Based on this intel, the customer’s request could be approved or rejected by their bank.
Step 4: If the request is accepted, the payment processors send the approval to the payment gateway. At the merchant’s website, the customer could see if their transaction was successful.
Step 5: The funds are transferred from the customer’s account to the merchant’s account.
Despite so many things happening in the background, the entire procedure of online payment processing only takes seconds. That’s the sheer beauty of it. It is one of the most seamless and secure ways of doing business for an eCommerce store.
Things To Know About Ecommerce Payment Processor
Payment processors are responsible for authorizing and processing payments. There are certain things you need to know about the payment processors when choosing your eCommerce businesses.
Whether they are PCI compliant or not?
The Payment Card Industry Data Security Standard (PCI DSS) is a string of conditions and requirements that credit card companies or any company that accepts, stores, and processes information of credit and debit cards need to meet to ensure that all online transactions are secure, and protected from identity theft, and other kinds of frauds.
When surfing through the list of companies providing online payment processing services, do ask them whether they are PCI compliant or not. This would help you shortlist the companies for online credit card processing via online payment methods. PCI-compliant processors are best for credit card transactions.
What payment method do they accept?
More and more customers are enjoying the convenience of using different payment options, such as mobile payments via Apple Pay or Google Pay or online payment via debit or credit card payments.
How much fees do they charge?
If you’re a small eCommerce business, you need to pay attention to the fees that your payment processing is charging. Many processors charge a monthly fee, but some may charge a fixed fee on every transaction.
If you need a payment solution or consultation on the best payment processor for your business, contact CashDiscountProgram.com.
How Can CashDiscountProgram.com Help your E-commerce Business?
If you’ve just started out, chances are you’d find everything extremely overwhelming, especially details related to the payment processing tool. All of this can prove to be a bit daunting, from choosing the right payment processor or deciding whether or not you want to open a merchant’s account to comparing different processors based on your needs and cost.
This is why it’s best to leave everything to professionals. We provide a comprehensive payment processing solution. Here is what we can help you with.
- We can offer you transparent and seamless processing solutions and payment solutions to get you ahead of your competitors and give you customers countless online payment options to choose from.
- We can help make accepting money for your online store much simpler. With our support, you could quickly process payment online without experiencing the hassle yourself. In a nutshell, we all perform all the messy work on your behalf.
- We can also accelerate your payment acceptance options, along with making debit and credit card processing super-fast and super-efficient.
- We also provide several products, including a POS, that can help you enhance your business operations.
- We could also help you reduce your processing fees, which, to be frank, can overwhelm any business owner, especially when you’re dealing with a payment processor and have a merchant’s account. So, that’s one of the many things that we pride ourselves on.
These are only a few services to name that we offer to our clients. We can help you take your business to the next level by providing top-notch processing solutions and consultation.
With us doing all the tedious work of processing the payment, you could focus your attention on the more critical aspects of running your business, thus, helping you manage your time much more efficiently. If you have any questions regarding eCommerce payment processing, contact us today. Please schedule a consultation with us now to find out how you can take full advantage of the cash program discount.