So, do you want to accept payments online?
When it comes to setting up a merchant account for your online business, the process can be downright confusing. There is so much more than just identifying an investment bank that can provide you with decent rates and nominal fees. Of course, you’ll want to shop around for good rates for your merchant bank, but rate negotiation is only a small part of the business transaction cycle that you will need to consider.
There are several key components and services that make up the e-commerce process. Merchant accounts, payment gateways, shopping carts, processors, it all starts to get pretty complicated when you look at all the players involved. Let’s recap the basic online payment process:
- A customer visits your e-commerce website.
- The customer decides to make a purchase.
- The selection is added to the basket.
- The customer provides personal and financial information during the payment process which is recorded through a secure form.
- Details submitted from the form are passed to a payment gateway service, which is separate from the shopping cart technology. The gateway service securely routes information through relevant financial networks, including your merchant bank.
- If the transaction is successful, the customer’s credit card account is debited and your merchant account is credited.
- Once all funds have cleared, you are then able to transfer money to your business checking account.
So where do you start?
Well you can shop around for the different services required and once you have established your providers hope they can all integrate with each other which is unlikely (eg your payment gateway will need to be compatible with your shopping cart and work.with your merchant account). Or, you can find a web payment solution which can work with you to handle all your merchant account needs. A good e-commerce provider will offer shopping cart, payment gateway, and merchant account services, and the best providers are not tied to a single bank, but can work with multiple banks, allowing them to negotiate the best rates for you based on your type of business and your transaction history. .
When looking for the right vendor, make sure you find a PCI DSS compliant vendor. PCI or the payment card industry has standards for handling sensitive credit card data and if you and your vendor cannot prove compliance, you may incur additional fees imposed by the commercial bank or you could lose. the ability to accept credit card payment on your website.
What is a payment gateway?
Most merchants understand the role and purpose of the shopping cart, commercial bank, and credit card processing company, but what about the payment gateway? A payment gateway is a separate component that acts as an intermediary between the shopping cart and the financial networks involved in the transaction. The gateway is essentially a virtual version of your point of sale terminal. It checks the validity, encrypts the transaction details, ensures that the data is sent to the correct destination, and then decrypts the responses that are returned to the cart. The process is very transparent and your customer would never interact directly with the gateway itself, only the shopping cart.
Source by Taunia Kipp