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Understanding How E-Commerce Payment Processing Works

E-commerce payment processing solutions and online credit card payments have become some of the most used terms when it comes to business nowadays. The way that people prefer to pay for their products and services has changed and business owners have to change along with them to remain relevant and attractive to clients. This is why more and more complex and safe solutions are being created to help close the gap between clients’ expectations and what business owners are capable of offering them. For the businesses to grow and develop they must first make sure that they understand what their clients want and know how to give it to them. This is why research is so important, especially when it comes to dealing with clients’ money and data.

What Are Online Credit Card Payments?

Technology has evolved spectacularly in the last few decades, and that means that anybody who wants to remain relevant and in touch with other people has to evolve along with it. This evolution has manifested itself in all areas of human existence. One of these areas where it can be seen and felt more than in others is the payment processing industry. Clients of online businesses nowadays want more diverse and secure ways in which to pay for the products and services they buy from online businesses. To keep up with clients’ demands business owners have to update their business models and come up with more advanced ways of keeping their clients satisfied.

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 Online credit card payments are the new thing clients are using to do business with companies located all over the world. But, for those companies to be able to accept these kinds of payments, they have to understand how they work and be able to offer a strong security environment for their clients. This is why new and improved solutions are being developed almost every day to improve and enhance customer experience and to make sure that valuable customer data isn’t leaked by accident thus improving the trust the clients have in the company.

Online credit card payments aren’t that different from regular credit card payments. The main difference is, that because it is done online, there are more security layers and more parties involved to maintain those layers. It all starts with the business owner setting up a merchant account with a bank. Technically it can be any bank that offers those kinds of services, but most prefer to work with the bank they are already using. This makes for the application process to go over more smoothly than f working with somebody you don’t know. After providing some information about your personal financial history and that of your business, your account is set up and ready to be used. Be careful when signing up for that account though. Make sure you read very carefully the contract that the bank offers you and check for any hidden fees or rates. You don’t want to wake up paying more than you’re making.

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The second step in getting your business ready for receiving online credit card payments is to choose the right payment gateway. Gateways are pieces of software that are used primarily by internet-based companies to intermediate data communication between the client and the credit card processor. Think of them as a virtual substitute to a Point of Sale terminal. They are called gateways because, just as a POS, they do or do not let payments go through. It all depends on the response they get from the credit card processor. If the transaction is authorized, then the money from the client’s account is transferred to the businesses’ merchant account and from there to the regular bank account. This is called a settlement and it can take several days, depending on the bank’s policy, on the amount of money stored in the account and on the volume of transactions processed.

What Does E-Commerce Payment Processing Refer to?

When talking about e-commerce payment processing most people think about the way that the payments they do for online shopping are processed by various payment processing solutions. And they are right. There are numerous payment processing solutions out there, many of which can be integrated on various e-commerce platforms, stores, and websites. Most of them offer various features to distinguish themselves from the others, with the business owners having to face the daunting task of choosing the right one. But that isn’t necessarily such a hard thing to do if the owners are willing to put in the time and do some research on what their options are.

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For instance, in the world of e-commerce payment processing, few solutions even come close to PayPal. With over 200 million active accounts, out of which 22 million are merchant accounts, the platform has become a household name. it is renowned for its flexibility, transparent, affordable pricing, and the fact that it is present in almost every corner of the world. A great feature, that helps business owners reach out to more clients worldwide, is the fact that the platform supports multiple currencies. While other platforms might also have this feature, none come close to the number of currencies supported by PayPal. Another great thing about this platform is the fact that clients don’t need an account to make payments. This is why PayPal is one of the best solutions for small and large businesses alike.

Coming up in a close second in the race for the best e-commerce payment processing solution is Amazon Pay. This revolutionary service is a well-respected product of the Amazon company, that comes to help merchants and clients alike. It boasts a very user-friendly interface and a strong payment fraud service. One of the downsides of this platform is that it operates a reserve system, meaning that it can keep a transaction in reserve for up to 14 days if it’s one of the users’ first transactions. Also, both clients and merchants have to have active accounts on the platform to use it.

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