As a merchant, it’s important that your customer can use his or her card for the purchase of a sale. Understanding the basics of eCommerce can be a challenge, so here’s a rundown on the most important aspects of payment processing so you can boost sales.
A payment processor is a company that communicates and relays information from your bank to the customer’s bank. The processor lets you know if a customer has enough funds in their account for the transaction to go through and will process any refunds if a customer is incorrectly charged. The payment processor also checks for security measures to ensure the customer’s card data is correct and isn’t being used for fraudulent activity.
In summary, a payment processor analyzes and transmits transaction data. They are the mediator between you and the financial institutions involved in payment transactions.
What connects the payment processor to your merchant account – the bank account needed to accept money from a customer’s debit or credit card payment – is the payment gateway.
Merchants use electronic payment gateways to authorize credit and debit card payments for checkout. The payment gateway may be used for online retail or at a traditional brick and mortar site by facilitating a transaction between a payment portal (e.g. website, mobile phone or even an interactive voice response service) through a payment service provider.
Here’s how it works:
- The gateway captures the credit card transaction;
- Encrypts the data;
- Forwards the data to the customer’s credit card company like Visa or MasterCard;
- Routes the transaction to the bank that issued the card;
- Approves or declines based on the customer’s available funds;
- Passes the transaction back to the credit card network and processor; and
- Returns with either an approval or decline notice for the customer to see.
Without a payment gateway, you wouldn’t be able to receive your customer’s payment. They authorize the transfer of funds between buyers and sellers.
This may sound like a complicated and lengthy process, but it takes only a matter of seconds to complete. All of your transactions are grouped into a single batch and sent to your bank so you receive payment during “settlement.” Typically, transaction funds are deposited into your primary account within two to four business days.
This technology allows you to effectively protect sensitive data for you and consumers through secure transactions, and expand your customer base by having shoppers access your store anytime and anywhere.
Today’s technology provides a single solution for payment processing, where companies like as ReliaFund help businesses conduct transactions and easily fill orders. If you do business online, accepting credit cards is essential for business. Choose a payment processing solution that provides the most convenient and beneficial payment options for your customers.