During the ’90s, predictions about the future of internet commerce were bleak. Not only was the technology awkward, but for the most part the infrastructure was absent. By infrastructure we don’t mean the networking side but rather the banking side.
Both banks and merchants were afraid to put their businesses online because of potential frauds and the resulting huge losses. Online credit card processing was non-existent as were the required financial institutions and entities and their associated business models, methods and exchange and clearing protocols.
How Did All That Change?
In only about a decade since then, internet commerce was booming. That’s because online businesses have certain advantages which were quickly seen by both the merchants and the online shoppers. For merchants, they were:
- Better exposure to potential customers or prospects
- Increased sales
- Real-time payments through online credit card processing
- Instant alerts
- An enjoyable customer experience through convenience and ease of use
Finalising a sale will lead the buyer to a checkout page where at least one method of payment will be by online credit card processing.
What Do You Need In Order To Offer Online Credit Card Processing To Your Clients?
For every online business offering a range of electronic payments, of which online credit card processing is one, the infrastructure needed, both hardware and software, would usually be outsourced to their payment processing solutions providers.
They will have the necessary technical capabilities and operational expertise to carry out the types of electronic transactions needed by the respective merchant. What the merchants should aim for, instead, is an integrated website-webstore-payments processing solutions platform.
The convenience and ease of use of such an arrangement will give the buy era unique purchasing experience and an incentive to come back again.
How Safe Are Transactions Done By E-Commerce Payment Processing?
Although they are the main target for online fraud, online payments and ecommerce processing are very safe. And they should be. Not only because of varying amounts of money transferred but also because sensitive personal data of clients of that particular site are moved during such transactions.
Both the banking industry and the governments in various countries have regulated ecommerce payment processing and the conducting of online business. Standards for the safe and secure transfer of digital data are in everyday use and one of them is PCI-DSS. It is a set of technical norms, rules and operational guidelines for processing and accepting online transactions and it is widely adopted.
Can E-Commerce Payment Processing Provide For Other Methods Of Payment?
Not only it can, it is definitely recommended that it should. In too many cases, clients abandoned the purchase because on the checkout page, their preferred method of payment was not listed. Not finding your payment option on an e-commerce site is a powerful deterrent.
Anyone planning to sell online should integrate a number of payment methods. Although credit cards are the established norm, other methods, like e-wallets, bank transfers and debit cards should be provided. After a period of collecting statistics and customer research and interaction, this list can be expanded or reduced, accordingly.
Do Payments Processing Solutions Add Value To Your Webstore?
If your webstore aims for the best purchasing experience for your clients then a payment processing solution at the end of that cycle is a must. It is the best way to convert an occasional buyer into a long-time customer. What always appeals to us is the one stop shop experience. No customer should be redirected in order to finalise a sale. This can be achieved by integrating the website with an e-commerce platform.
Such a platform will integrate an online payment device, also known as a shopping cart, a payment gateway and a payment processor which is the financial institution working off-site on your behalf. They will do all the necessary processing required by that particular transaction from that particular merchant.
They will check the validity of the card, the funds available and if the credit limit has been reached, if the card holder is the authorized user and if the transaction is legitimate and not fraudulent.
What Goes On Behind The Scenes When E-Commerce Payment Processing Is Involved?
Ecommerce payment processing is quite complex despite its apparent rapidity and swiftness. The process is made up of stages or steps and each of them has other steps to go through before completion. The first step is represented by the buyer placing an order and handing over his or her payment data.
It is followed by the merchant accepting the payment data, which in the case of online stores is done using a virtual device called a shopping cart instead of a physical device such as a card reader or a POS. The collected payment data is then transferred to the payment processor using a payment gateway. The payment processor, after initial checks, sends the data to the card network, such as MasterCard or Visa.
They in turn will route this payment information to the customer’s bank. The customer’s bank receives the payment request and checks the customer account for sufficient funds or credit. They will also run other security checks to prevent potential frauds and ensure the transaction is legitimate.
If everything is ok then a message is passed back through the same channels to the merchant, acknowledging that the transaction was approved and the goods can be delivered. If not a message informing that the transaction was declined will be issued, usually accompanied by another explaining the cause.
At this point though the settlement, or the effective transfer of funds, is not complete yet. This will be done in a separate process, taking up from one to two (or more) days, depending on the card network involved.
What To Look For When Selecting An ECommerce Payments Provider?
The main recommendation would be cost. Although many ecommerce payment solutions companies are open and transparent about their fees, there are many which are not. Multiple reviews on specialised websites warn their readers about hidden fees and other unfair commercial practices, designed to take advantage of the business owners lack of knowledge regarding online commerce and payments processing.