Online payments add convenience to consumers. Customers do not have to pay for postage, envelopes, write checks, or physically drive to a location. This change in business transactions is now a business standard expected by consumers. They want to be able to sign into an online account for bill pay. Businesses which sell products online have higher sales. They reach more customers. Consumers like the luxury of website purchasing. Products and services may be paid for from anywhere. Within a few days, the merchandise is at their front door. Online payments make doing business easy. They increase consumer satisfaction through expediency. Credit payments have advanced throughout the years. Originally people used cards only at physical retail locations. Ecommerce trade has opened up a new profit window for many. Companies that were once limited to a few customers now have the ability to reach consumers worldwide.
A business is required to set up an internet merchant account in order to accept this form of online payment. Payments may be made on business websites. This business account is held by a merchant provider. Banks and third party services have the ability to create the account for processing. Once the account is in place, the acceptance method must be arranged. Secured business websites have to be easy to use. Providers offering hosted payments sites take the responsibility for security, maintenance, and support. Individual businesses with their own sites take on a little more of the technical responsibility. Payments are entered on a web page as encrypted information. A gateway then transmits the encrypted data between the two financial institutions. Within seconds, the transaction is approved so that the customer can go about doing other things.
Ecommerce Credit Card Processing In Its Simplest Form
What happens when a consumer makes a credit payment over the internet? First, the merchant has to have three components set up. A checking account is required to create a merchant account for ecommerce credit card processing. Methods must be in place to run the credit card through the payment gateway. Once all these components are available, the consumer can begin the purchase. A web form appears requesting payment information. The customer enters their information into the secure site. Encrypted data is sent by the payment gateway to be verified. Consider this the screening process for the credit card. Details are transmitted to the merchant. An electronic form of the credit payment information will be sent as well. Integration of the account and gateway are what makes credit payment possible.
Additional background processing does occur. Validation is performed to complete the transaction on the customer end. They are given a receipt with a confirmation code or order number. Credit transactions are then added to a batch file which in turn is sent to the merchant bank. They then send this information to the Federal Reserve. Funds are removed from the customer’s account to be deposited into the merchant’s bank account. Credit transactions place a hold on the cardholder’s balance. Debit transactions are directly taken out within a few business days.
