What Is ECommerce Payment Processing?
The ECommerce payment process is an online procedure that enables stores to accept and confirm electronic payments for services and goods. This process includes the transmission of financial details between clients, sellers, and payment service providers.
Simply put, the payment process starts with customers' credit card authorization and is accomplished after ensuring the merchant gets the indicated sum of money for the sold goods. Now, let's explore the most popular ecommerce payment options.
Most Common eCommerce Payment Methods
Payment processing in eCommerce may be performed via several well-known methods like bank cards, transfers, mobile payments, and BNPL (Buy Now, Pay Later). You can familiarize yourself with the crucial features below in the list:
- Debit or credit cards: When a client buys from your eCommerce store, the payment processor contacts the card issuer (Amex, Visa, Maestro, Mastercard) and confirms authorization. After approval, the money is transferred to your bank account.
- Bank transfer: It is a suitable method for B2B eCommerce where a client logs into their online banking and manually sends funds to the online store.
- Mobile eCommerce payment services: It's a convenient method that is performed via Google Pay or Apple Pay.
- BNPL payments: The seller receives the entire amount at once, but the customer will pay for the product or service in installments according to the schedule established by the payment provider.
In most cases, clients' preferences around eCommerce payment options may vary according to their convenience, geographical location, and transaction fees.
Key Elements Of ECommerce Payment Processing
Before selecting the best payment solutions for eCommerce business, we advise learning the primary elements that are responsible for online transaction processing. We shed light on this information below.
Payment Gateways
It is a special virtual mechanism that connects your online store to the payment processor. Basically, a payment gateway gets customers' information, authorizes the transaction, and safely transmits payment data from your online store to the payment processor. Thanks to the payment gateway integration, your eCommerce business may accept, process, and manage a wide range of payment options like bank cards and online wallets.
Payment Processors
The payment processor is the special entity that gets financial information from the gateway (it must verify the client has the necessary sum for successful eCommerce processing). Subsequently, it securely performs the transaction, sending money from the client's issuing bank to the seller's bank account.
Merchant Accounts
Generally, your merchant account is the business bank account you have created to get earnings for eCommerce payments. Of course, you may use this money for your business or personal needs, for instance, to pay suppliers and manage cash flow.
ECommerce Payments Step-by-Step
Commonly, eCommerce payment processing consists of eight steps, starting with adding the product to the shopping cart and finishing with money received in the merchant account. You can take a look at the step-by-step procedure below.
Customer Places Order
Initially, the client browses an e-commerce website, picks the necessary products, and adds them to the virtual shopping cart. Then, the customer moves on to indicate the payment information in the special field. It is necessary for successful eCommerce payment processing.
Payment Gateway Encrypts And Sends Payment Info To Processor
At this stage, the payment gateway comes into the scene. It reads the client's payment data, encrypts information, and sends it to the payment processor. Here, the customer does not need to perform some additional actions, as all the processes occur automatically.
Processor Approves/declines Transaction
This stage of the eCommerce payment process includes verification and authorization of the information received from the gateway. Namely, the payment gateway should ensure the clients' cards or e-wallets have the necessary funds or credit to back up the online transaction for purchase.
Processor Routes Transaction Response Back To Gateway
Next, if there are no technical difficulties with the information, the payment processor approves the online transaction. Then, the payment processor lets the transaction gateway know whether the financial operation has been refused or authorized.
Gateway Decrypts Response And Sends To Merchant
Next, the payment gateway reports back to the merchant's online store about the response (the online transaction approval or rejection).Merchant Captures Funds If Approved
In the case of transaction approval, the merchant receives money from the client (or from the creditor). At the same time, the client (or creditor) is charged for the purchase. Still, if a customer's account does not have the necessary sum, the transaction will interrupt.
Merchant Fulfils Order
At this stage, the seller must prepare the paid order to be sent to the customer at the specified address. In some cases, managers may contact the buyer to clarify necessary details.
Processor Deposits Funds In Merchant Account
The final stage of eCommerce merchant processing is crediting funds to the seller's account. It happens after confirmation of sending the order to the buyer.
The Importance Of Choosing A Decent Processor For Your Business
Experts predict that by 2026, the global eCommerce market will exceed $8 trillion. Therefore, you should already provide your online business with a reliable payment ecosystem and convenient management. By choosing the cream of the crop solutions for eCommerce payment systems processing, your online store will be able to accept payments via credit and debit cards. Furthermore, your eCommerce platform will furnish alternative payment methods for your buyers, thereby increasing the number of customers. After all, since a myriad of clients wants to pay for goods or services using smartphones, you need to provide them with this option.
Beyond that, by making the payment process fast and convenient for customers, you will be able to reduce the percentage of refusals to buy and increase the number of orders on your eCommerce website.
How To Choose An ECommerce Payment System
Since the modern digital world offers a wide range of methods for online transactions, you have to view numerous eCommerce payment solutions before picking a suitable one. We have covered the essential criteria you have to pay attention to in the list below:
- Business needs and goals: Consider what payment types will be convenient to provide on your eCommerce site. Moreover, indicate the necessary currencies and think about whether you need to support recurring payment processes.
- Security measures and compliance: If you plan to accept bank cards, your business must comply with PCI DSS to robustly protect client payment data from fraud activity. You have to ensure the chosen payment system uses solid encryption methods for customer data protection. A decent payment processor will guarantee two-factor authentication and unique methods for fraud detection.
- Ease of integration: It should be clear to you how to connect and integrate new e-commerce solutions into your current online store. The invoicing process and their management should be intuitive and not time-consuming.
- Chosen company's customer service support: It is very important that in case of additional questions, you could communicate with managers via email, phone, or live chat.
Best ECommerce Payment Processors To Keep An Eye On
Well, if you have realized the primary technical aspects, you are ready to explore the finest eCommerce payment processing companies. Let's discuss what they have to offer, their features, and prices below in the review.
PayPal
This international eCommerce payment system has over 295 million users around the globe and started operation in the 2000s. This company works with 26 currencies so it is suitable for international businesses. Since paying online with PayPal is flexible and intuitive both beginners and experienced customers may efficiently use it.
Setting up the payment gateway will not take much time and allows you to start selling on the site quickly. However the company includes fairly high fees for international payments and an increased chargeback fee.
Stripe
Initially the company was targeting the US market but it has expanded services to 25 other countries as well. Stripe accesses numerous tools for merchants enabling easy customization of payment processes. Merchants may accept payments via bank cards online wallets and even cryptocurrency like Bitcoin and Litecoin.
Additionally the company provides efficient mobile payments for more customer convenience. Such eCommerce payments are processed within two days which is considered one of the quickest transfer times.
Square
Square processes eCommerce payments for over 200 American Canadian British Japanese and Australian companies. The payment processor supports over 6 currencies and is suitable for bank cards and other alternative transaction methods like Apple Pay and Google Pay.
This company is also known as a provider of point-of-sale (POS) solutions and is frequently used for in-person transactions. Square's online payment processing and software are suitable for both startups and big-sized businesses.
Sezzle
Founded in 2016 Sezzle is suitable for online merchants who want to provide a Buy Now Pay Later eCommerce payment processing. The company operates in the USA Brazil Australia and other countries. Sezzle flawlessly integrates with Magento WooCommerce Wix and other well-known e-commerce platforms. You may offer convenient purchases to your customers without the need to take out a loan or utilize a credit card.
Useful Tips To Keep In Mind
Even if you pick the finest option from reputable and convenient eCommerce payment processors you have to focus on other essential aspects to boost your sales. Based on our experience we have listed several tips for more profitable business activity:
- Offer a plethora of payments. Besides bank cards you should also provide payments via e-wallets cryptocurrency Apple Pay Google Pay etc. Do not overlook an opportunity to furnish a Buy now pay later option for more customer convenience.
- Optimize the transaction process. You have to check out how the payment process occurs. If the potential client needs to perform numerous stages and fill in a wide range of fields it may provoke abandonment from purchase.
- Clearly indicate payment policies. You need to provide the necessary information about accepted payment methods transaction processing time and returns policies on your eCommerce website. Furthermore the client should clearly understand what fees may be charged per transaction.
- Ensure that eCommerce payment processing occurs securely and safely. We recommend taking all proactive steps to prevent fraud activity. Namely use card security code checks two-factor authorization and address verification. Additionally do not forget to respond quickly to any chargeback disputes.
- Boost clients' payment experience by tracking such essential metrics as transaction time and conversion rates. As an eCommerce business owner you need to follow customers' feedback and data analytics to increase online platform improvements.
- Additionally you can follow groundbreaking technologies that appear in the financial industry and integrate them into your eCommerce business.
Final Thoughts
Consequently fast and convenient eCommerce payment processing is crucial for online businesses of any size that aim to grow. In the case of selecting the wrong payment provider your customers may be unsatisfied with the transaction process technical difficulties and long waiting time. In contrast choosing the finest payment provider can guarantee smooth and secure eCommerce payment solutions with small fees and minimal downtime.
