Welcome to the 21st Century, a place where a lot of business occurs online with ease unlike the traditional and the old methods being used previously. Taking into consideration the number of orders being done through the online mode, your business needs to accept online payments since as per a report around 70 percent of potential customers abandon a particular product at the cart due to lack of online payment options.
What exactly is an Online Payment
Accepting and integrating the Online Payment option for your business may seem easy on the surface, however, it’s not as easy as it sounds. There are a lot of complex elements involved in it.
In order to know how to accept and integrate payments in an online store, it is imperative that you understand the behind-the-scenes elements properly.
1. Payment Gateway
Payment Gateway in its literal sense is the online Point of Sale terminal (POS). It’s basically an application that runs on the merchant site which allows the online sale to be processed.
2. Payment Processor
The major work cut out for a payment processor is to take the information of credit or a debit card and verify it with the card provider network. Once the information is provided the card network verifies all the relevant details and sends the information to the Payment Processor.
3. Merchant Account
The best merchant accounts, basically account that allows merchants to accept the payments made by the respective customers through their credit or debit cards while paying for a particular product or service.
How does Online Payment work?
- First of all, the customer chooses a particular product and checks out from the cart page and puts all the relevant data such as Debit or Credit Card details on the respective payments page;
- The card information is sent out by the Payment Processor to the respective card network such as VISA or Mastercard and later the information such as the card details and the funds get verified;
- After the card network verifies all the relevant details and also makes sure that there are enough funds to make the payment, the network requests the bank to release the funds and after making sure that the transaction isn’t fraudulent the bank issues a confirmation to the card network;
- Then this information is given to the payment processors, which later on requests the funds from the host bank, and the funds get eventually transferred to the merchant account and the order is confirmed.
Different Types of Online Payment Methods
The ecosystem in which the customer makes the online payment is getting wider and wider day by day. The approval rates and the ease of use of these respective online payments are increasing day by day and even the choices for the customers to make the payments are increasing at a rapid pace.
These are the most commonly used online payment methods.
1. Credit and Debit Cards
Often the simplest solution can be the best one. Credit and Debit cards are the most favored solution for online payments by millions of users across the world.
According to a study, more than 60 percent of the people who do online transactions use Debit and Credit Cards such as Visa, Mastercard, American Express, and Discover.
2. ACH Processing (AKA E-Check)
Even though credit cards make instant payments and are considered the go-to option by most of the people out there. The one major con that needs to be considered is that they charge a hefty processing fee.
The ECheck makes a really good payment option considering that it’s almost like paying cash and doesn’t even charge you the hefty prices of a credit card transaction.
3. Mobile Wallets
A digital wallet is also known as a mobile wallet basically stores the credit and debit card information of the respective customer within its database.
Using Mobile wallets you can make easy payments considering that you will not have to enter the debit and credit card details, again and again, the wallet will do that for you. Mobile Wallets have the best conversion rates for payments in E-Commerce sites considering how fast they are.
4. Email Invoices
An Email Invoice basically needs to be sent to the potential customer via mail or any other sort of communication platform. Once that is done it just will take a couple of clicks for the customer to get the payment done.
Are Online Payments Risky?
There are a lot of claims that online payments are extremely risky as they can cause a person to lose a lot of money in a data breach. However, this claim isn’t true in its entirety.
There is no denying the fact that if you are reckless and not careful enough you may get scammed and lose a lot of money.
However, with the implementation of 128 bit SSL encryption and other two-factor authentication processes incorporated within the payment mechanisms, it is very difficult for scammers and hackers to steal your money just like that.
Merchants are expected to implement a proper verification process, fraud detection mechanism and even hire a developers team to make sure that the online payment system is safe and without any loopholes.
Choosing the Perfect Payments Provider
One of the most difficult aspects of integrating and accepting payments in an online store for your business is to choose your Perfect Payments Provider.
Well there is no perfect answer to this since choosing the payments provider for you depends on the type of business and how much total money your business deals in since different payment providers have different transaction costs and also different policies for the respective merchants.
The owner of the business needs to evaluate both his long-term needs and short-term aspirations for his business in order to best select the merchant for his online business.
As you can clearly see there are a lot of aspects that need to be considered in order to integrate your business accurately with the online payments mechanisms.