An introduction to online payment options for ecommerce
Selling products and services via an ecommerce platform opens the door to an entire world of potential customers. If you’re just starting out in online retail, you’d be surprised how complex it is to take payment from those customers. Luckily, this is the sort of stuff we get excited about, so here at Datadial we’ve written a series of blogs on everything you need to know about online payments.
Broaden your payment methods perspective
The approach that you take to accept payments via your website can be the difference between getting by and exceeding your revenue expectations. The good news is that sophistication in technological advances has resulted in a boom in the multitude of approaches and options available when it comes to how you accept payments via your website.
The market is flooded with competing ecommerce payment services, making the world of online payments, at times, a complex one. However, if you want real results online, this is something that you’re going to want to get right. Sifting through providers and doing your research is essential.
A guide to online payment methods
Panic not! This is where we step in to offer a helping hand. This blog is set out to be your ultimate go-to online payments guide. By taking away the complicated and replacing it with clarity, we hope that you will feel confident to make an informed decision about how to tackle your online payment conundrums.
We’ll start by offering some general understanding of how the online payments world works, discuss the fundamental such as PCI compliance, advise on factors to consider and discuss the variety of payment gateways and payment options that are out there to choose from.
How do online payments work?
As with many things’ ecommerce, a basic understanding of how online payment processes actually work goes a long way in informing your decision. So get comfy, buckle up and here goes…
If you want to provide online payments to your customers, you’re going to need two things: a payment gateway and a merchant account. What is a payment gateway?
Think of your payment gateway as a card terminal in a traditional brick and mortar store; the piece of technology that allows you to take payments for the products and services that your customers buy.
On your website, your payment gateway allows you to accept details from customers and use these details to authorize transactions. You customers input their payment details and the payment gateway acts as the middle-man between the transaction that is made on your site and the payment processor.
A key job of the payment gateway is to get your customers’ sensitive payment data over to the payment processor safely and securely. This is done via an encryption method known as tokenization which works by generating a random, secure code that carries the customers’ data safely to a payment processor via SSL.
The payment processor then steps in…
Once the payment gateway has safely passed the customer’s payment data to the payment processor, work begins to authorise the payment. The job is split between two types of payment processors: the front-end processor and the back-end processor.
The front-end processor works to connect to the various card associations such as Visa and Mastercard. It provides the settlement and authorization service that confirms the payment to the merchant’s bank. The back-end processor accepts the settlement from the front-end and is responsible for moving the money from the issuing bank to the merchant account. You want to know what’s really amazing? This all happens in a matter of seconds.
A merchant account allows you to accept payments
A merchant account is a specific type of bank account that allows you to accept payments online and is fundamental if you want to make money from your website. The merchant account works to take debit or credit card payments from the payment processor. Once your merchant account receives the funds, this is then sent to your own bank account.
But which one is right for you?