Everything You Should Know about Online Payment Processing Software

What is the Role of E-commerce payment processing? How are payments processed in online transactions? Can everything be solved in one way?

Modern technologies create perfect conditions for business development. An E-commerce platform, or simply speaking a website, can make even a tiny shop world-known.  

However, here comes the problem of accepting payments. First of all, you should spend some time learning the payment processing work. If your business copes with cryptocurrency, it’s necessary to get acquainted with bitcoin payment processing, etc.

In this article, we are going to take a look at online processing platform work. What should you know about this combination of FinTech solutions?

What is the Role of E-commerce payment processing?

Humanity always finds ways to simplify our lives. The first thing that comes to mind considering that is online shopping. This kind of business is very popular because ordinary consumers like the possibility to buy everything with one click. It brings success to those companies that make shopping so easy.  

Now, let’s consider how this business could develop without the payment processing industry. It plays a significant role in all kinds of business activity from sailing goods to IT and forex trading.

Statistical data proves the statements above. In 2018 “Digital Commerce” segment’s transactions valued US $2,873,774 m. According to its growth rate, this total amount will increase up to US $4,083,110 m in 2022.

General Notion of Online Payment Processing

The simplest payment processing platform includes three main elements:

  • Merchant account. This is a type of account that is necessary for accepting online payments. You can implement it with the help of a specialized processing company, independent conductor, or a big bank. This account stores money your clients pay you.
  • Payment processor. It is a financial institution that conducts transactions. Except for funds availability and credit card validity, they deal with questions connected to security providing. Payment processors check the data and cope with incorrect charges and other errors.
  • Payment gateway. The main function of a payment gateway is connecting merchant accounts with credit and debit card issuers like Visa and Mastercard. According to the safety measure, it’s necessary to use a gateway not to make direct transactions between banks.

A lot of companies that provide businesses with payment processing software offer all three components in one platform. In other cases, merchant accounts and payment gateway are combined with a third-party payment processor.

The whole process includes a few steps:

  1. The customer picks up an item and pulls out their card
  2. A transaction is submitted by the merchant.
  3. The transaction is sent by the gateway to the processor
  4. The transaction is verified by the processor
  5. The processor receives money from the client’s bank
  6. The merchant’s bank receives money from the processor
  7. The processor approves or denies the transaction via the gateway
  8. The merchant is informed about the result of the previous step
  9. The money comes to the merchant

General requirements for online payment processing software

You cannot develop a payment gateway if your company is not a Member Service Provider (MSP) or an Independent Sales Organization (ISO). To get this status a business has to correspond to some technical and financial requirements that can be provided by a large bank. After that, you need to build up a web platform or mobile app, where your consumers would have access to the transaction data.

Do not neglect PCI Security Standards. They are very important in implementing secure payment solutions. There are 12 rules of PCI and they are very strict and straightforward. Your company won’t be allowed to get credit payments if it doesn’t pass a PCI DSS audit and certification. It is impossible to be done without a professional team of software developers who would guarantee clients’ data protection. So, there are a lot of recommendations you should follow to pass the audit. It’s better for you to learn about them more because processors wouldn’t cooperate with your company without keeping many vital aspects such as Data Security Policy.

Can everything be solved in one way?

The answer is no. A few years later typical card payment processing software could suit all business needs. But now this industry is really developed, which means you can set up more advanced systems.  

Industries’ special features also vary, that’s why every institution needs a special system. For example, financial institutions require many different processing channels including ATMs, point of sale terminals, eCommerce shops, and mobile transactions, which are not necessary for other online businesses. That’s why it is important to find the system or develop a unique one, which would fulfill your business needs and bring you a lot of advantages.

What should you know about this market?

Now there are a lot of modern platforms developed by famous brands that offer all necessary aspects. Among them, there is PayPal and others.  

They all provide companies and clients with data protection and the possibility to pay by different currencies that make them widely used all over the world. They also offer customized features and a user-friendly experience.  

Their main disadvantage is that they include high rates of payment processing. Some security holes might also appear. That’s why you should consider all pros and cons before accepting them or connecting to your unique software.

You should also understand that different software suites different goals. It also depends on your business development. If it is growing and becoming more profitable, you have to use modern and flexible systems.  

All in all, their major target is providing customers with easy payment solutions. It will help to attract more consumers. To satisfy all their needs it is necessary to cope with different FinTech solutions. It is complicated work, so you need to find really good partners. You will see that the advantages will be worth that time and money.

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