Ecommerce industry is booming as many businesses are moving in its direction. People are shopping online more than ever, and this is a great time to start your ecommerce business if you have been thinking about it. However, there is a major issue that many online retailers deal with - how to process the payments of customers safely?
Ecommerce businesses depend highly on online payment, with only 16% of consumers carrying around cash. Online sellers must have a robust system in place to process their payments efficiently. This article will explore how ecommerce payments should be handled and processed.
What is Payment Processing?
Before diving into how payments are processed, it is important to understand what payment processing actually means. A payment processor is generally an entity that handles the transactions between seller and bank. Their work is that of an intermediary who handles the backend logistics and processes of the various transactions taking place so that businesses can safely accept payments from their customers.
Methods of Online Payment for Ecommerce
There are many methods through which ecommerce business owners can accept payments. It is important that ecommerce businesses accept as many of these methods as possible. This will help them gain more customers as it is common for customers to abandon their carts when their preferred option of payment is not available. Below are some methods that all business owners should try to incorporate into their ecommerce business.
- Credit Cards
- Debit Cards
- Online Wallets
- Digital Currency
- Buy Now Pay Later Solutions
Important Components of Ecommerce Payments
There are three crucial elements that all ecommerce payments require. These are important parts of payment processing that all sellers must have to properly process payments.
- Payment Gateway - It is used as a bridge between the buyer and the payment processor. It transfers the information from the website to the processor, including the authorization or decline of a website.
- Payment Processor - A payment processor is essentially a financial service provider. The work of the processor is to ensure that the whole transaction goes on smoothly. It takes the information from the gateway, verifies that buyers have the required amount, and deposits money into the merchant account.
- Merchant Account - These are the accounts where money is received after payment passes through the processor. A merchant account receives money after payments have been settled and authorized by the customer.
How to Choose an Ecommerce Processing Platform
Choosing the right payment processor is important for your ecommerce business. There are many factors to consider before making a choice. These factors are essential and should be seriously thought of to reduce the chances of future complications.
- Security - Ensuring security is the foremost concern when it comes to choosing a processing platform for your ecommerce business. Ensure your site has an SSL certification. This will ensure that the connection gets encrypted when the customer makes the payment. This will secure their data from any breach. Your payment processing platform should also be PCI compliant. PCI stands for Payment Card Industry, which refers to the rules all merchants should follow when accepting payments. It is especially for credit card transactions for security.
- Tokenization - Creating tokens for sensitive information is necessary to avoid data theft. Suppose your site allows users to save their payment information on it so they don't have to hassle when repeating their purchase. In that case, you should ensure that that information gets converted into tokens. Tokenization works by converting your card information into tokens that are recognizable to the server by a unique number. This protects your customers and your website from getting its data compromised in any way.
- Fee and Costs - Consider the cost of the platform you are going to be using as well. Some platforms charge you a fixed fee per transaction, or they can take a percentage of your payment as the fee. Some platforms also have a monthly payment model. Choose based on what will be most profitable for you. Having a hefty fee to pay is not something businesses, especially small ones, prefer. Sometimes, there can also be additional costs that you have to pay for using different types of services. Consider all these costs before choosing a platform finally.
- Payment Accommodation - This is the most important factor to consider since not all payment processors will accept all types of online payment methods. Your online store should accept as many modes of payment as possible to not lose any customers. You should also consider whether your processor accepts international transactions and supports buy now, pay later options. This is extremely crucial as your business model can also be impacted by it.
To Sum Up
E-commerce payments are extremely crucial for your business. Understand all the concepts thoroughly to avoid falling behind on any front. It is also important to choose processors that best fit your needs. Online shopping and online payments go hand in hand, so ensure that you are well-versed in payment processing.
