Payment is a vital part of eCommerce. With streamlined eCommerce payment processing, you can deliver a smooth and secure checkout experience to your customers. This will help you lower your costs, reduce shopping cart abandonment, and improve the customer experience. Let’s find out in this article how eCommerce payment processing works and what the best payment solution providers are.
What is Ecommerce payment processing?
Due to the extensive usage of internet-based shopping and banking, eCommerce payment processing has grown in popularity. It is the process of accepting electronic payments for online transactions.
Although each eCommerce business is different, the objective should be the same: to make the online checkout experience as simple as possible while still ensuring secure payment transactions.
There are three elements of eCommerce payment processing, including:
- Payment gateway: an online payment service integrated into the eCommerce platform through which customers can make payments for online purchases.
- Payment processor: a company that communicates with and put money in your merchant account on behalf of customers.
- Merchants account: It is the gateway that talks to your bank. The store’s gateway connects to the merchant account and it charges the customer’s payment information directly.
Payment Gateway vs Payment Processor
There is some misunderstanding about the payment gateway and payment processor. Both two elements attach and run together to help users in carrying out the payment process. However, they are different and have specific functions.
Payment Processor
Payment processors handle the actual money transactions like taking the customer’s money and crediting you. A payment processor acts as an intermediary between your store and your merchant account.
Payment processors provide three main functions:
- Transmit the payment data between the customer’s bank and the merchant’s bank.
- Provide merchants with the physical equipment needed to accept card-based transactions.
- Help you create a merchant account by yourself or collaborate with third-party merchant services providers.
To make it easy to understand, I will give you an example. When a customer buys a shirt from your store, he chooses to pay using his stored credit card. After the customer fills in his payment information on the store’s website, the store is actually charging that credit to his account. The store notifies the merchant’s gateway that the charge was processed. The merchant’s gateway sends information to the payment processor to set up the payment in your merchant account. The payment processor then credits the merchant account, and the merchant now has money that comes from that stored credit card.
Payment Gateway
A payment gateway is the most common interface between your website and a payment processor. It is what you use to get customer data from your website to your payment processor. They are the payment methods customers see on your website’s checkout page, such as PayPal, Stripes, Opayo, and more.
Payment gateways provide two main functions:
- Take the customer payment data stored on your site and send the data directly to the payment processor.
- Accept payment information directly from the payment processor without involving your store’s website.
How does eCommerce payment processing work?
Step 1: Open the payment gateway
Whether customers are buying a present, paying a bill, or making an online donation, they begin an eCommerce transaction by entering their credit or debit card details at the checkout.
Step 2: Communicate to the payment processor
The encrypted payment details are sent to the payment processor via the payment gateway once they click the button to submit the information.
Read more: https://magenest.com/en/ecommerce-payment-processing/
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