In the vast world of revolutionizing online businesses, online payments have become a pivotal tool for organizations of all sizes and industries. This effective and frictionless method remains a steady opportunity for them to stay competitive and provide customers with the most convenient ways to pay.
However, in order to access effective payment processing solutions, organizations mustn’t neglect its fundamentals and how the entire process is executed.
In this blog, Unity Payments will discuss how payment processing works, the entities involved, and efficient online payment processing solutions for businesses.
What is Online Payment Processing?
Payment processing is a term given to the series of actions of transferring funds in a secure environment between payer and payee. The term refers to the entire process of charging a card, opening a secure gateway, and maintaining fiscal communications between banks and consumer accounts.
Payment processing solutions are evaluated through diverse forms of checkout transactions, including credit and debit cards, EFTs, mobile payment technologies, digital wallets, and cryptocurrencies. Additionally, large bodies of leadership and stakeholders are involved in developing and overseeing these systems.
Diverse Types of Payments That Are Processed
There are multiple ways that online payments are processed, including:
Credit/Debit Card
The most popular way to get paid is through a credit/debit card. Credit card payment processing or debit card payment becomes available once you collaborate with a payment processor to manage consumer-to-merchant payments. After signup, the payment processor allows you to set payment gateway integration and offers customers the convenience of paying through their cards.
ACH Payment
ACH (Automated Clearing House) is an automated payment method that enables bank-to-bank transactions that are utilized to transfer monetary values between both accounts. To exemplify, online streaming platforms offer subscription services and process their payments through ACH methods. So, if you’ve ever auto-paid your subscription fee without realizing it—then you’ve essentially experienced the ACH payment.
eCheck
An echeck or “Electronic Check” is one of the types of payment processing solutions that enable cross border payments through a digital version of a paper check. The eChecks are also considered a form of ACH payment, as they involve electronic funds transfer and supervise the payable transfers from one bank to another.
Mobile Payment Technologies
Mobile payment is a frictionless and quick method that is processed through a mobile device, including smartphones or tablets; this seamless payment method is utilized in place of a physical debit or a credit card.
With the assistance of mobile payment technologies, customers can securely pay for their purchases with the facilitation of mobile payment apps or digital wallets.
Cryptocurrency
A cryptocurrency payment is a digital transaction made using a decentralized digital currency like Bitcoin, Ethereum, and many more.
When a consumer executes a crypto payment, they use their digital wallets to transfer a specified amount of cryptocurrency to the recipient’s address. This revolutionary payment processing solution occurs on a blockchain and maintains records of all crypto transactions securely and transparently.
Key Elements of Payment Processing
Before Delving deep into the payment procedure, it is valuable to understand the components of payment processing.
Customer: A consumer or an entity that executes online payment to make purchases of preferred merchandise.
The Merchant: A payment processing solutions provider that accepts payments from customers.
Payment Procedure: the method the consumer selects to make the payment, including credit cards, debit cards, crypto payments, or mobile payments.
The Payment Gateway: A service provided by the payment processor that securely documents payment information from the POS system and sends details to the payment processor—maintaining the transaction in accordance with PCI compliance and security
The Payment Processor: A Payment processing company that oversees the technicalities of the transaction, validates payment information, provides authorization, and manages communications between the banks.
Acquirer: The acquiring bank that holds the merchant’s account and accepts payment on the account’s behalf, processes the operations, and settles the fiscals in the merchant’s account.
Card Network: Card issuer to exemplify (Mastercard, Visa, American Express) that follows certain rules and standards and facilitates transactions.
Payment Security: Technologies and standards like the Payment Card Industry Data Security Standard (PCI DSS), tokenization, and encryption work to safeguard payment information, ensuring its safety and integrity while helping to prevent fraud and data breaches.
Settlement and Reconciliation: This refers to the process of moving funds between the issuing and acquiring banks, which is then followed by updates to the merchant’s account and the creation of transaction archives for both the customer and the merchant.
How Are Payment Processed?
After exploring the key components of payment processing, it’s important to understand how they are processed.
To begin with, a customer showcases a card to the store either physically or digitally. The data, account title, and number are passed through a payment gateway. Subsequently, the gateway sends the documented details to the merchant’s bank. Moreover, the payment processor utilizes the given details and notifies the card issuing bank of the executed transaction.
Now, with every needful party involved and alerted of the transaction, the customer’s bank certifies whether there are sufficient monetary values available to make a purchase—At this stage, the entire payment process is either approved or declined.
However, if the procedure is approved, the consumer’s bank communicates with the retailer through a payment processor, records the transaction with the individuals involved, and notifies them about the transaction via a payment gateway.
Best Online Payment Processing Solutions for Businesses
the meticulous analysis of the payment process is critical. However, businesses must adopt effective payment processing solutions and maintain streamlined operations and customer loyalty for steady revenue.
Here are a few payment processing solutions for businesses of all sizes:
Build a Secure payment Environment
In order to maintain rapport with your consumers, you should implement robust security measures, including encryption tokenization, and achieve SSL certifications. Ensuring PCI compliance and security standards will allow you to maintain a secure payment environment.
Provide Diverse Payment Options
Accommodate the varied preferences of your customers and improve their shopping experience by providing several payment methods, including credit and debit cards, digital wallets, and other alternative payment options.
Establish Transparent Refund And Chargeback Policies
Create and clearly communicate refund and chargeback policies to your customers in order to minimize disputes and confusion. Offer thorough customer service to address issues quickly, thereby reducing the likelihood of chargebacks.
Conclusion
Understanding payment processing allows your business to thrive immeasurably and enables streamlined operations. Additionally, consistently learning and adopting payment processing solutions will allow you to stay ahead and maintain accurate and seamless organizational processes.
