In recent years, credit card payments have been growing in popularity both online and in-person. Since some consumers prefer to pay with credit, it is highly beneficial for eCommerce owners to obtain a basic understanding of how online credit card processing works.
Learning about the benefits, risks, and costs involved in processing credit card payments can help you choose an effective merchant account provider and payment gateway.
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Unlike B2C payments, B2B payments are transactions that take place between two businesses instead of a business and a consumer. In other words, currency is exchanged for goods and services between retailers, wholesalers, corporations, and other companies.
When it comes to B2B payment processing, they are often much larger in scale and involve a digital or physical invoice. After a purchase is made from one company, a purchase order is issued. Once the terms are approved, the order is processed. A sales invoice is then generated and sent to the buyer for payment due within a set time.
For businesses, a credit card processor is essential when it comes to receiving online payments from consumers. PWC statistics from a consumer insights survey show that as many as 45% of buyers used their smartphones to make online purchases in 2020, displaying the popularity of mobile payments.
If you have a website that doesn’t accept online payments, you are probably losing out to your other competitors. With the rise of the global pandemic and convenience of online shopping, processing online payments can make accepting transactions and processing shipments more efficient than ever.
In addition, companies that process online payments can offer added flexibility such as recurring payments for subscription services as well as the option to pay for large purchases in smaller installments. Because of this, accepting online payments can increase your sales numbers and lead to greater profits.
Accepting online credit card payments has its own set of advantages and disadvantages as a seller and as a buyer.
Some benefits of online payments include:
Some drawbacks of online payments include:
To keep your online transactions safe as much as possible through your eCommerce store, you should try to choose a well-known provider and take key security measures.
Although there are some risks of accepting international payments, processing credit card payments from international buyers can be highly beneficial for expansion and growth.
The easiest and safest way to accept non-US-based payments includes using platforms such as PayPal and Stripe.
The benefit of using PayPal is that it is accepted in most countries and easy to set up. However, you will need to pay for transaction fees as a business. This can range from
1.90% plus a fixed fee for QR code transactions to 2.90% plus a fixed fee for commercial online transactions. You’ll also need to pay another 1.5% fee for international transactions.
If you sign up with Stripe, you can receive over 135 currencies online. The interchange fee for credit cards is 2.90% plus 30 cents. Other fees include a 1% fee for international cards, in addition to a 1% fee for currency conversion.
Choosing the best payment gateway depends on the unique needs of your business. Some factors to consider include safety, system compatibility, and location.
Setting up eCommerce credit card processing for your business is quite simple. You’ll need a merchant account and a payment gateway in order to accept payments. The merchant account is like a bank account for your business to withdraw funds, while the gateway is what connects this to your online store.
Many companies like PayPal, Square, and Stripe offer integrated solutions for your website. All you need to do is sign up for an account and choose the plan or contract that works best for your business. Depending on the size of your business and transaction volume, you may need to submit other information.
Setting up currency conversions for online payments can be done through a payment gateway. Depending on the platform you choose, you can go into your website settings and choose to sell in multiple currencies. Usually, currency conversion depends on the market exchange rate at the time of the transaction in addition to a fee.
With the rising popularity of mobile phones, more and more businesses are seeing the value of digital payments made through smartphones. Contactless payments offer speed, security, reliability, and convenience since all it takes is a quick tap of a smartphone against a device. Payments are automatically deducted from a digital wallet or credit card.
If you’re on the fence about accepting mobile payments, this list of pros and cons can help you come to a more informed decision.
Some benefits of mobile payments include:
Some drawbacks of mobile payments include:
Understanding the basics of online payments can help businesses gain more insight into the world of payment providers.
Some popular examples of a payment gateway for online transactions include PayPal, Stripe, and Square.
To process credit cards, merchants can make use of traditional POS systems, mobile POS systems, and other online payment processors.
Yes, PayPal is a payment gateway that processes and authorizes customer transactions so that businesses can get paid.
While a payment processor is what handles transactions between the merchant and the financial institutions, the payment gateway is the medium that communicates to the merchant whether the transaction has been successful or unsuccessful.
A payment API connects a payment solution with an existing application. For a payment gateway to work, it needs to be compatible with an eCommerce website or web application.
Before choosing a payment gateway, it’s important to explore the various features and payment methods that each processor offers so that you can find the one that best suits your needs. Security and flexibility should be two of your top concerns, especially if you are processing credit card payments on an international level.
If you are classified as a high-risk merchant, learn about what to do when a credit card processor turns you down and learn more about your payment processing needs on Processing Card!
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