Payment Processing for Online Businesses

In the current times, the operations of most forms of business ventures have shifted online. In 2020 alone, the global population size that purchased products online surpassed 2 billion. More and more entities are undertaking a shift from their brick-and-mortar offices to creating a blooming virtual presence.

Henceforth, the conventional cash-based payment systems cannot sustain the need of such online business entities. Virtual organizations and e-commerce platforms need an upgraded online payments system to function seamlessly. These payment methods include debit/credit card, ACH payments, mobile wallets, and mobile payment apps.

Electronic payment choices have become a fundamental aspect of running a successful business entity. With the rapid internet adoption everywhere, clients are keen to get multiple digital payments from their merchant vendors. Business owners, especially those running small businesses, now realize the relevance of having virtual payment options for better reach. Learn more about B2B eCommerce.

Many are on the lookout for merchant account services that can address their online payment processor needs. If you are among such entrepreneurs who want to unearth the nitty-gritty of online payment processing, we are here to help you out. We have a lucid guide for you to understand how payment processing functions for online business concerns.

Introduction to online payment processing

Online payment refers to the payment for acquiring goods or services via digital means or the virtual exchange of money. Thus, online payment processing comprises processing data from electronic payment methods like mobile wallets or credit cards. In order to carry out online payments, there is an exchange of personal and financial details of the customers and vendors.

Important terminologies associated with online payment processing

Shopper

A shopper is none other than the client individual or organization who buys products from a merchant’s virtual store. The shopper has to provide relevant financial details to complete the online payment.

Ecommerce Merchant

An eCommerce merchant is a business organization that undertakes the sale of products or services via virtual platforms. These merchants need the coherence between different components to conclude their online payment processing needs successfully.

Key constituents of online payment processing

Let us dig into the meaning and relevance of different components needed for online payment processing.

Payment gateway

Akin to the point of sale for regular merchant stores, payment gateways act as virtual POS that link the payment processor and the merchant website. It serves as the interface between the customer and the payment processor to complete a given transaction smoothly.

Payment processor

The hero of the online payment processing function for every transaction is the payment processor. It enables merchants to accept online payments from their customers. The payment processors adhere to the guidelines laid out by card associations. These online payment processors connect the customer bank or acquiring bank to the merchant’s account while verifying the transaction’s suitability.

Such verification safeguards the merchants from fraudulent dealings. This entire secure payment process gets concluded in a matter of a few seconds with the support of payment processing companies.   

Merchant account

A merchant account denotes the particular bank account that vendors use to process online payments from their clients. Having a merchant account is indispensable for transferring online funds. Business entities need a merchant account provider to manage their online processing, especially credit card transactions.

Parties involved in online payment processing

There is an involvement of multiple parties to conclude each online payment transaction. Such parties include:

•  The shopper
•  The merchant business
•  The payment processor
•  The merchant gateway
•  The credit card network
•  The shopper’s banking company
•  The merchant’s banking company
•  Merchant account service provider

The general procedure underlying the functioning of online payment processing

Here is the usually adopted mechanism needed to make every online payment transaction a reality.

1. The initial process starts when the shopper selects an item for purchase from the merchant’s website/app and goes to the checkout phase. Each shopper chooses the desired payment option, including credit card or mobile wallet, and enters the required details.
2. Suppose the shopper selects the credit card payment method. Now, the customer’s card details are shared through the payment gateway securely. It reaches the payment processor.
3. Further, the payment processor verifies the shopper’s credit card information. It shares the submitted information with the credit card network.
4. After verification of the transaction details, the credit card network sends an approval request to the shopper’s bank to release the required sum. Later, the issuing bank verifies and cross-checks the authenticity of the transaction and shares intimation about the approval status of the transaction.
5. Once the payment processor gets the transaction approved, the payment is transferred to the merchant account. This payment remains in the merchant account for the specified time interval. After completing the waiting period, the payment processor redirects the sum to the merchant entity’s bank account.

Charges payment processors levy for their online payment processing services 

The payment processors generally impose the following types of fees on their customers. The cost varies according to the merchant’s requirements and service plans.

1. Annual fees
2. Discount rate
3. Transaction fees
4. Chargeback fees
5. Minimum monthly fees
6. Address verification fees
7. Monthly statement charges
8. Gateway fees
9. Termination fees
10. Charges for credit card processing machine

Untangle the complexity revolving around online payment processing with Beyond Bancard

Over 36 percent of American shoppers are making their retail purchases online. It would be best if you leveraged this rise in the virtual shopping domain. Beyond Bancard can be a leading choice if you need a trustworthy merchant account service provider for your eCommerce business. We can act as a solid supporter to carry out every online payment seamlessly for your business. Contact us to know more about our merchant services!