Every business, whether in -store or online, needs two things: a payment gateway and payment processing service providers. Both are vital for seamlessly carrying out transactions and, in turn, enhancing the customer experience. And happy customers mean an improved business reputation.
Superficially, the payment process seems simple. But the entire cycle that occurs in those few seconds is extremely detailed, so picking the right payment processing solution for your business is vital.
For that you need to understand the basics of the process, which we outline below.
The company that handles transactions to allow your customers to pay for their products and services are payment processors. They relay communication from your customers’ cards, whether credit or debit, to their bank and yours. If the card information checks out and there are enough funds, the transaction goes through. This entire cycle takes place in seconds.
The payment processing service providers also check for transaction security and can take care of accidental or inaccurate transactions. But they may charge you for refunds you make for a number of reasons.
When someone makes a purchase with a debit or credit card, a series of electronic actions take place to complete the transaction. There are a handful of elements involved between the card swipe and ‘payment accepted’ message.
1. Point of Purchase
This is where a customer initiates a purchase with a store and provides a payment method. It can be a debit card, a credit card, cash, digital payments, pre-paid credit cards, et cetera.
2. Payment Gateway
When the payment information is sent through the payment processor from the bank of the customer to that of the merchant, this tool connects that information securely. It then communicates whether the payment was accepted or declined.
3. Payment Processor
The payment processor takes the information back and forth between the customer’s credit card-issuing bank and the merchant’s account. It validates the security of the card and facilitates the payment’s transfer, thus transferring the funds from the issuing bank to the merchant account.
4. Issuing Bank
The financial institution associated with the customer’s payment method is called the issuing bank.
5. Merchant Account
The merchant account is where the payment to the store, or, as we say, the merchant, gets deposited.
Payment processing solutions allow a merchant to accept a wide range of payment methods. Here are some of the most frequently used ones.
1. Debit and Credit Cards
These are two widely-used payment methods. The card is swiped through the machine, the payment processor checks its validity and funds available, and the payment is either approved or declined.
E-wallets have become popular these days because of their ease of payment and safety from theft. The customer signs up for an e-wallet account and they add their bank or card details to it. To make the payment, they enter the merchant account details and security PIN they picked at signup.
3. Bank Transfers
Bank transfers are usually preferred for B2B transactions. The customer has to authorize the payment initiation by themselves via internet banking.
1. Try to Keep the Cost Low
The payment processor with the lowest cost doesn’t necessarily mean it is the best choice. However, you still want to keep your overhead costs as low as possible. Apart from monthly and setup fees, here are some other expenses you might encounter.
If you have high-value transactions, find a processor with low transaction fees and a set monthly fee. And always look out for hidden fees.
2. Multiple Payment Options
Your payment processor should be able to allow your customer to pick from various payment options. If they don’t want to pay from credit or debit cards, they should be able to use bank transfers or e-wallets or some other payment method.
3. Security Against Fraud
Credit card fraud is more common than you can imagine, so should be a serious consideration for you and your customers.
Before you pick a payment solution, make sure you check their fraud protection services. They should offer data encryption and other necessary security measures.
4. Customer Service
Pick the payment processing solution that offers 24/7 comprehensive customer support. They should be reachable via call, emails, and chat. So, if you face any issue, you know you can count on them to resolve it.
For a smooth transaction, you must have the right payment processor. Easy payments save your customers a lot of time and effort, leaving them with an enjoyable experience. Contact the payment service providers to find out your options and how much they will cost you.