Just a quarter century ago in 1995, an upstart company called Amazon began selling books and other goods over the internet, initiating an ecommerce tsunami that continues to gain momentum around the globe to this day. If you are considering selling your products and services online, there are several components that you need to master. Of these, understanding the ecommerce payment process is certainly one of the most crucial.
Payment processing, defined.
When goods or services are ordered over the internet by a customer, there must be a way for that customer to provide funds to the merchant. As a matter of course, this type of electronic transaction requires that the buyer provide personal and financial specifics such as contact details, bank account, and/or credit card data. In order to protect the security of communications between buyer and seller, to authenticate the shopper’s identity, and authorize the payment, third-party entities are also involved.
The merchant’s payment processor is generally assigned to be in charge of most of these tasks. They manage the entire payment by linking to the buyer’s “acquiring” bank to ensure that the transaction can be approved. Additionally, they authenticate the user’s identity and screen for any suspected fraudulent activity, providing a strong layer of security for the merchant.
The payment gateway.
The payment gateway is another important element in online payment processing. It functions as the customer-facing part of the transaction that gathers the shopper’s information and securely communicates it to the merchant’s payment processor. Gateways are sometimes included in a seller’s payment processing package but can also be obtained separately from another provider.
When considering which payment gateway to choose, ask the following questions.
- Does the gateway allow your customers to pay with a variety of card types, eWallets, and local payment methods, including multiple currencies if necessary?
- Does the gateway have robust anti-fraud tools and other security protocols?
- Is it in compliance with the Payment Card Industry Data Security Standard (PCI DSS) that protects sensitive cardholder data?
- Can the gateway handle recurring billing, buy-now-pay-later, bank transfers (ACH), and other payment choices? This feature is a must if you ever want to sell using a subscription model.
- How do you want to integrate with the gateway? Options include self-hosted, vendor-hosted, or one that integrates with a local bank. The choice that is best for you depends on your technology and degree of technical expertise.
- What fees will you be charged? The more complex your business needs, the higher these will be. Remain on the lookout for less visible charges, including those for refunds and chargebacks, API calls, and early contract termination.
The merchant account.
Of course, you need to set up a place where the funds from your transactions are ultimately deposited. Your merchant services provider can provide you with a merchant account that complies with the regulations imposed by the credit card companies and stands ready to hold your funds until you withdraw or transfer them.
Consider incorporating mobile payments.
With each passing year, more shoppers are using their smartphones and tablets to conduct shopping tasks. Consequently, your business website must be easily viewable and navigable with all types of devices. By making your website mobile-friendly, you are sure to increase the time people spend on your pages, thus raising the chances of a completed purchase and more money in your pocket.
How online payment processing can jump-start your business.
Ecommerce opens many doors for entrepreneurs. Customers can browse and make purchases from anywhere day or night and can receive their order at their doorstep just days or even hours later. Alternatively, they can look at your offerings using their smartphone or computer and make their final purchases later in your physical store. In short, embracing this option offers several advantages that include the following.
- Increased sales. Potential buyers from all over the country and even the world can visit your website and make purchases, exponentially expanding your base and amping up your profits.
- Thanks to your payment processor, you will have marketing tools at your disposal that can help you convert sales and cultivate customers. Upsells, promotions, and cart abandonment prevention strategies can all work to enhance your relationships and turn casual visitors into long-term customers.
- Your online payment processor helps to ensure that transactions are secure and in line with PCI DSS requirements. This allays buyer fears about the safety of paying online and removes the burden of compliance from your shoulders, leaving you with more time to concentrate on growing your business.
The commercial landscape has been radically altered since the dawn of online shopping in 1995. If you haven’t yet discovered for yourself the many benefits it can bring to your business, there is no time like the present. In this era of cutthroat competition and razor-thin profit margins, you can’t afford to put adopting this innovation off for another minute.
