Nowadays, most consumers are excited due to the ability to be able to pay using credit cards. Ecommerce credit card processing is essential for every business since money can quickly and conveniently move from the customer’s account into the business account. Whether they are purchasing goods or paying invoices, consumers increasingly prefer doing it electronically.
The speed and ease at which the process takes place to contradict the complex operations behind the scene. For those shopping around and bill payers, there is little need to understand the process in detail. But for business operators receiving the money, it makes sense to comprehend the basics of how eCommerce credit card processing works.
The technology has three primary components, which come with security issues and fees. One can decide to deal with the three separately or opt for a solution that will bundle it for you.
Consumer interface
Irrespective of the business, there is a need to come up with a way of mingling with your customers. For those selling products, they interact through their website and shopping cart. For services providers they send an electronic invoice with a payment link. Either way, providing your customers with a means to pay online is the first step.
Merchant account
Once you start the online transaction, you have to create a platform where your money will be landing. One cannot directly deposit a credit card receipt into bank accounts. As an alternative, the cash gets forwarded into a merchant account. Before accepting any credit card payments, you will be required to open an account.
If you have a good banking relationship, that’s the best place to begin since funds get transferred from your merchant account to your business account before the customer paying the bill, allowing chargebacks. Your merchant account is considered a line of credit. The application process is an excellent reason to collaborate with your bank and people you are well acquainted to.
One can acquire a merchant account online or through third-parties vendors. The fees charged vary, with others being front-end loaded. Using your bank, you are allowed to pay for the application and set up the cost. Once completed, you are offered discounted transaction fees moving forward. When setting up a merchant account, analyze and consider any possible future implications.
Payment gateway
It is a software application with the ability to communicate with credit companies to obtain authorization or denial of every transaction. You can compare it to the virtual credit card machine, minus the chip reader. This low level of security is among the reasons transaction fees for e-commerce businesses usually are higher than for sales when the card is actually at hand.
The technology encrypts the customer’s data- one of the critical features of the gateway’s functionality- and transmits it to the credit card company. The credit card company cross-checks if the consumer has the needed credit, puts the funds on hold, and sends back a message for sale to be approved. The process happens within 2 to 10 seconds, and the customer is informed that the request has been approved immediately.
E-commerce credit card processing is one complicated process, but that should not hinder you from conducting business online. There are various online financial service companies mandated to help a service provider with collecting and billing.
