Integrating an online payment solution to existing business channels is not only beneficial to your customers, but it is also a leap to a profiteering cash flow cycle. Customer convenience increased sales, and faster transactions are only a speck of milestones a payment gateway can achieve.
However, the benefits you reap from a payment processor narrow down to your choice of a service provider. Payment processors vary in functionality, payment flow, pricing models, and customer support systems.
This guide illustrates what goes into identifying the best online payment processing solution.
How Does Payment Processing Work?
When businesses accept payment through credit or debit cards, the real-time appeal is that the process has closer to zero waiting time. Although it only takes a few seconds, what goes on behind the scenes of a payment gateway is a far more complex undertaking.
Generally, payment processing takes place in two major phases, including payment authorization and fund settlement.
Phase 1: Payment Authorization
This phase involves identifying a payment card and verifying the availability of funds for approval by the issuing bank. The customer swipes their card at the merchant’s POS to complete a purchase. At this point, the buyer’s card information and transaction details are transmitted across the credit card processing network for payment authorization. The card processing network includes the issuing bank, acquiring bank, card networks, and payment processors.
Phase 2: Fund Settlement
In the fund settlement stage, the merchant liaises with the acquiring bank to receive funds for all authorized and completed payments. Typically, transactions are accumulated and paid out as a batch by the acquiring bank. Notably, the merchant must have a merchant account into which the funds are settled.
Why Do You Need a Good Payment Processor?
A payment processing solution is critical to every merchant’s checkout experience. However, with more players entering the payment processing industry, sourcing a reputable payment processing solution is paramount to the success of online payments. Here is why.
A payment processor is designed to offer convenience to buyers looking to make payments using credit cards. With a click of a button, buyers can purchase products, order services, and acquire an online course, thanks to the convenience of payment gateways. Customers do not have to walk or drive down the store or carry cash at hand to get what they want. On the other hand, an online payment processing solution provides merchants with a flexible option to accept options. This way, businesses do not have to turn away customers looking to process card and online payments.
More Payment Methods
Customers can sideline your brand due to rigid payment channels, even when your products are of great appeal. According to a World Bank publication, over two-thirds of the global adult population receive or process payments using online and digital wallets.
With a reliable payment processor, businesses benefit from extensive payment options, most of which appeal to the global audience. For instance, Adyen, a German-based payment processing solution, allows merchants to accept payments through digital wallets, cards, and mobile banking.
The traditional channels of processing transactions can be quite lengthy. This is because of the many manual nodes involved in initiating, verifying, and completing a transaction. However, with an online payment solution, businesses can accept payments and process transactions in seconds. Again, the settlement of funds into a merchant account makes it easy for businesses to be hands-on with their cash flow.
The choice to accept payments through online payment online gateways becomes security leverage to all your business transactions. This is because digital payment solutions are highly regulated, with service providers legally obliged to adhere to stipulated security provisions. Compliances, such as PCI-DSS, ensure maximum security of transaction flow from the cardholder to your merchant account.
What Makes a Payment Processor Good for Online Transactions?
Primarily, businesses use payment processors to enhance their ability to accept payments online. However, payment processing solutions are generally ideal for online transactions for wide-ranging reasons, including the following;
Payment processors are built with the capacity to integrate with external solutions, such as CRM software and other business management systems.
Analytics and Reporting
Unlike manual cash registers, payment online gateways allow you to keep track of transactional trends and patterns. This makes it easy to identify payment anomalies and generate a real-time report of your payment cash flow.
Ease of Use
Payment processing systems are easy to use. Business owners and employees do not have to be tech-savvy to access, use, and implement online payments.
The capacity to accept payments in multiple modes and currencies is a key driver to scaling your operations globally. With more businesses stretching beyond national borders, having a payment processing system places your brand at a competitive edge internationally.
The growing online shopping population rapidly expands the demand for online payment solutions. E-commerce trends and patterns reveal that online payments will likely run the show in the future’s payment landscape. Therefore, online businesses must procure reputable payment processing solutions to beat the increasing market competition.