With an e-commerce business, it’s important to understand the fundamentals of online payments and merchant processing. Without a foundation of this knowledge, credit card processing can be an incredibly daunting concept.
At Revitpay, we’re here to help you with this process. Understanding the broad strokes of payment processing, from collecting information to the variety of payments accepted is crucial to managing your business.
Types of Payment Methods:
There are a variety of payment methods you can choose from when it comes to accepting payments online.
Alternative Payment Methods
Online and app-based wallets like Google Pay, Apple Pay, PayPal, and buy-now-pay-later services, like Sezzle, and Affirm.
Bitcoin and many other cryptocurrencies are slowly being accepted by more processors.
The classic, and one of the most popular ways to make transactions online and off.
Like getting paid by cash or check, this method allows a customer to get their payment directly to their bank.
While there are additional methods of payment available such as invoicing or ACH, these four are the most popular and convenient.
The Basic Three Components of Payment Processing
Payment processing has a ton of moving parts, so this is a breakdown laid out in the simplest terms
- Your payment gateway is the connecting application that facilitates sales between you and your payment processor.
- From the gateway, payment processors verify that transaction information, ensuring the customer can complete the payment, which is sent to your merchant account.
- The funds reside in a Merchant Account until processed.
Key factors to Consider when Choosing a Processor
Understanding the basic features that a Payment Processor provides is the key to finding the right fit for your business. However, numerous aspects that you may not have direct involvement with are incredibly important to be aware of when narrowing down what you need.
The Featured Payment Methods
Your processor should support your customers’ preferred payment method. If you have a worldwide customer base, you shouldn’t be limiting yourself to just processing Amex and Discover cards which aren’t globally accepted. If your base is made up of a younger generation, you’ll want to make sure you provide app-based payment methods.
Tokens established for sensitive information
Tokenization converts a customer’s credit or debit card information into secure account numbers, in order to identify a customer without revealing private information.
Protecting yourself from potential hacks or leaks is incredibly important because while it would technically be the fault of your processor, a customer will still steer their frustration toward the business
The fees processors charge can be difficult to understand, and as a smaller business, you should have a basic understanding of how they work so you’re not caught trying to pay for fees you weren’t prepared for.
The basic method for processors is charging a percentage, plus a fixed fee per transaction. Others have a sort of subscription service, where you’re charged a fee per month.
Besides the basic payments, other charges might sneak up on you. For example, Chargeback penalties, Cancelation fees, etc. It’s best your processor is fully transparent with you on exactly what you will be paying for.
Moving back to security, any business that stores or transmits customer credit card information is required to be compliant with the Payment Card Industry Data Security Standards (PCI DSS). This responsibility falls on both you and the processor, so go over their process for PCI Compliance, and make sure everyone is on the same page with what you need.
Now that you understand what your processor can do for both you and your customers, you’re ready to start your search.
Knowing exactly what you need is crucial. Especially for businesses that rely almost solely on payments to even operate. To waste money and time on a processor that isn’t meeting your needs can be a real setback. If you plan on finding a processor, properly assess the factors listed in this article, and you should be able to set yourself up with exactly what you need.
Revitpay is a Payment Processor that will work directly with you on finding the perfect deal for your business to properly grow its e-commerce presence.