Modern consumers are increasingly gravitating towards ecommerce businesses. While brick-and-mortar retail isn’t going away, today’s customers value the convenience of shopping online. Selling your products and services online allows you to better serve your customers (and reach new ones), all while increasing revenue.
Payment processors undeniably play a critical role in the success of your online store, as shoppers won’t be able to make purchases through your website without a robust payment solution. But what other benefits does payment processing provide? And how can you find a reliable payment processing solution for your business?
To further shed light on payment processing, we’ve put together this guide outlining the benefits of online selling and how to implement digital payments properly.
Here’s everything you need to know about internet card payment processing and how it can help your business grow.
TL;DR
- Ecommerce solutions offer a range of benefits, including catering to a larger set of customers, maintaining brand consistency, and cutting down on your revenue cycle.
- To accept online payments, you need a payment processor and payment gateway. The payment processor is a financial institution that handles transactions between the two banks. Meanwhile, a payment gateway is the technology that authorizes and processes payments between a buyer and seller by securely transmitting payment data.
- To choose the right solution, you need to look at various factors when evaluating potential providers, including supported payment types, transaction fees and pricing structures, payout speed, and PCI DSS compliance.
How can internet card payment processing help my business?
From accepting credit cards and debit cards online to setting up your customized web store, there are various ecommerce solutions that can assist when in-person payments aren’t an option. Whenever your customer is ready to checkout, they can easily do so directly from your website.
After adding items or services to their cart, your customer can go to the checkout page. There, they can enter their debit or credit card details and process their payment digitally. When set up the right way, this process allows your customers to complete their entire purchase process without ever having to leave your site or the comforts of their home.
Why are these solutions so important?
Online payment solutions are crucial to a modern business. Without them, you’re unable to accept payment methods that are steadily increasing their share of overall payments.
This makes these payment services highly essential for any business, whether it’s a brick-and-mortar store or an online service. But the benefits of these solutions don’t end there.
To help you understand the larger advantages of online merchant account services, here is a quick overview of their most common benefits.
Cater to a large set of customers
The online payments process allows your business to accept credit card payments in an easy yet efficient way. Instead of driving down the complicated road of bank transfers or check payments, you can give your customers a simpler way to complete their purchases through your own website.
This gives you the opportunity to expand your outreach to potential customers who can’t visit your business location or use your services or buy your products remotely.
Maintain the consistency of your brand
With the ability to design your shopping cart and checkout process the way you want it, you can ensure a cohesive brand experience at all times.
To ensure brand consistency, look for API-based or embedded payment gateways that allow customers to complete their purchases directly on your site, without redirecting them to a third-party hosted page. This gives your customers the assurance of dealing with a business that has a larger and more robust infrastructure, which allows them to have more trust in your operations.
Enjoy industry-grade security
Reliable online merchant account services providers offer their services without putting your customers’ security at risk. They comply with the latest industry and security standards to ensure that you and your customers’ data remain safe from any threats.
By partnering with credible payment processing solutions, you can enhance your customers’ trust in your ecommerce solutions. New customers no longer have to wonder if they can trust your business with their financial information. By seeing that their payments are secured via renowned security standards, they become more comfortable in transacting with your business.
Cut down your revenue cycle
Online payments can give you a significant advantage in terms of improving your revenue stream. Instead of having to wait to receive payments after the delivery of goods, you can accept your payments at the time of order placement.
This helps you manage out-of-pocket costs more efficiently and cuts back on collection times. In fact, it’s one of the main reasons why more and more businesses are turning to online payment solutions as they manage their operations.
There’s no way around it: The convenience and security of ecommerce payment processing makes it a sought-after solution for businesses of all types.
What you need to accept online payments
Now that we’ve covered the benefits of ecommerce payments, let’s get into how the process actually works. Accepting online payments typically involves three main components:
- Payment processor: The payment processor is the entity that transmits payment data between the customer, their bank, and your bank. The processor interfaces with these parties to verify available funds and transmit transaction approvals.
- Payment gateway: The role of the payment gateway is to capture the payment information entered into the ecommerce platform in order for the data to be sent to the payment processor. Think of the gateway as the online equivalent of a card reader or point-of-sale (POS) system in a brick-and-mortar store.
- Merchant account: The merchant account is where the funds will be deposited.
Together, these three parties facilitate the online payments process. That’s why it’s essential to ensure that all of them are tightly integrated. Historically, businesses had to manage these three components separately. Modern integrated solutions, like Stax, unify the gateway, processor, and merchant account into a single platform for superior efficiency and data visibility.
Payment gateways vs. payment processors: What’s the difference?
When it comes to accepting credit card payments, both a payment gateway and a payment processor play crucial roles in providing a seamless checkout experience. Whether your customers are making a payment using a mobile wallet, contactless card, or the tried-and-true credit or debit card, it’s essential to have these entities in place. But what’s the difference between these two? How do they work together?
Basically, the payment gateway is the secure technology (like an online POS terminal) that collects and encrypts the card data. The payment processor (the service provider) securely transmits that data through the card networks to the banks to authorize and process the transaction. This means that payment processors process credit card transactions, while payment gateways facilitate the transaction by securely transmitting all data.
Let’s break it down a little bit more: Payment processors handle the core financial processing for all sales channels. However, for card-not-present (CNP) transactions, like online payments, a separate payment gateway (software) is required to securely capture and transmit the card data from your website. They work by transmitting all the credit card info between the acquiring and issuing bank, as well as the business owner. Whether the payment is approved or rejected, all of this is done by the payment processor.
They also often provide the actual equipment you need to accept credit card payments, like the point-of-sales (POS) terminal. These devices read the data on the EMV chip of a customer’s physical card or securely accept the data being transmitted by NFC for a contactless payment.
Put it this way: If you want to start accepting credit card payments and increase customer satisfaction, you’ll need a payment processor to facilitate those payments.
Now, payment gateways are needed for card-not-present (CNP) transactions, such as online payments via your ecommerce store. For transactions done over the phone (mail order/telephone order), you’ll need a virtual terminal, which is a secure, browser-based payment gateway that allows your staff to key in payments safely.
Payment gateways step in when a customer is about to check-out online. When they’re going to enter all their payment data, the payment gateway ensures that their credit card information is properly encrypted and routed accordingly, so there’s a secure connection between your online storefront, the customer’s browser, and their credit card company. Your bank will send a request to the issuer, and if the transaction is determined to be non-fraudulent and there are sufficient funds, the gateway will complete the sale.
In other words, think of a payment gateway as an online POS terminal for your business; it helps you operate a successful online store while ensuring both you and your customers’ security.
Choosing the right internet card payment processor solution
Online payments have several moving parts, so choosing the right partners is a must. Implementing online payments will look different depending on where you are in your business. However, one thing is certain: To provide a seamless omnichannel shopping experience, you’ll need to have a tip-top internet card payment processor in place. No idea where to start? Using these tips, you’ll be well on your way to success in no time.
Evaluate your current business model. First, take some time to remember what your business wants to achieve. What’s your model and your strategy? Where do you want to be in one year, five years? Who are your customers? What are their pain points? What kind of integrations do you need? What’s your ROI? Taking the time to deeply understand your pain points, goals, and targets can help you with finding the best credit card payment processor.
Consult with your current merchant services provider. If you already have an existing store or business and are just looking to add an online store, then tap into your current merchant services or payment processing provider.
In many cases, they may already offer payment gateway and shopping cart capabilities so you can easily set up shop online.
Be sure to ask about the payment systems they integrate with so you can keep all your tools and data in sync.
Look for providers that integrate with your ecommerce platform of choice. If you don’t have a payment processor yet, it may make sense to look for a preferred ecommerce provider and then see which solutions can connect with the platform.
Whatever the case, the important thing is to ensure that your ecommerce store, payment processor, and payment gateway can “talk” to each other so that data flows smoothly and you get paid quickly.
What to look for in a payment provider
There are numerous payment systems and providers in the market, so finding the right one can be overwhelming. To help, here are the factors to consider when evaluating payment processing services.
Supported payment types
Go with a payments platform that enables you to accept all payment types. Debit and credit card processing are table stakes, but bear in mind that some shoppers may choose to pay via ACH, eChecks, SMS, and more.
Choosing a provider that covers all these payment options will enable you to better serve your customers. Stax, for example, supports multiple modes of payment. From credit and debit cards to mobile payments (like Apple Pay), ACH, and invoicing, Stax’s platform has everything you need to accept payments.
Transaction fees and pricing structure
Accepting payments comes with a price. Interchange fees, assessment costs, monthly fees, and other expenses all factor into your overall payment processing costs. These things can add up, so make sure to ask providers about how much they charge and compare different rates. By ensuring you understand if there are any hidden fees, you’ll be able to get a clear view of the total cost of ownership. As a general rule of thumb, if they keep tacking on extra costs and fees, we’d recommend looking elsewhere.
For best results, choose a payments partner that doesn’t take a large cut out of your sales. Stax, for example, gives you access to the direct cost of the interchange (i.e., wholesale transaction fees).
Most processors adopt one of the following pricing models: flat-rate pricing, interchange-plus pricing, subscription pricing, or tiered pricing. They all come with pros and cons and require that you estimate how much you’ll be making in sales each month to get the best price.
The subscription model, as offered by Stax, charges a flat monthly fee in exchange for access to the direct interchange rate (interchange-plus-zero), eliminating percentage markups. This offers maximum transparency and the lowest overall cost for growing/high-volume ecommerce businesses. This makes payment processing expenses more predictable; plus, you get to keep more of your profits.
Security
It’s a given to have a provider that protects cardholder data in this digital age. PCI DSS, which stands for Payment Card Industry Data Security Standards, are the standards put in place to make sure payment data is securely processed, transmitted, and stored. It’s also not an option to have them; you must ensure PCI compliance. In fact, not doing so could lead to serious fines.
Ensuring full PCI compliance can be difficult for smaller businesses. Partnering with a Level 1 PCI service provider like Stax significantly reduces your compliance scope and provides the tools and security (like tokenization) to handle the most sensitive data securely, making compliance much more manageable.
For clarity, there are different levels of PCI compliance—the highest of which is Level 1. Again, Stax is a Level 1 PCI service provider, which means your data protection and security is a top priority.
Customer support
You need a payments provider that has your back. From answering questions about the platform’s functionality to navigating issues like security or chargebacks, having a partner with strong support offerings will go a long way.
At Stax, we offer 24/7 support, along with a comprehensive knowledge base to ensure you have everything you need to accept payments online, offline, and everywhere in between. To find out if a payments provider is actually providing quality customer support, look at independent/third-party review sites to see what real people have to say about their services.
Payout speed and cash flow management
How long will you need to wait to get your cash? Processing speed plays a big role here, both for customers and how you manage your cash flow. Processing times (settlement) are typically 1-2 business days (T+1 or T+2). While faster is generally better for cash flow, you must find out if the provider imposes a rolling reserve (holding a percentage of funds for a period), which significantly impacts your cash flow. Stax offers fast, predictable funding without rolling reserves for qualified merchants. We recommend finding out how long the settlement time is upfront, so you know exactly how long it’ll take to get money into your merchant bank account. Make sure you find out if there’s a rolling reserve policy to safeguard themselves in case of refunds and chargebacks.
The Stax difference: Your online store, connected with Stax
Finding the right payment processing solution can feel difficult, but it doesn’t have to be. Partnering your online store with the Stax platform puts your entire payment experience into one easy-to-use location. Along with statements, deposit reports, and PCI compliance, each online payment you process will be accessible and accounted for within your dashboard.
We offer subscription-based credit card processing with no markups, hidden fees, or contracts, and make it easy to set your ecommerce business up for success, whether you need to to accept payments in-person or via credit card or contactless card. We offer subscription-based credit card processing that eliminates percentage markups and high transaction fees, allowing qualified SMBs to save up to 40% on their overall processing costs. We combine this with dedicated in-house customer and technical support.
There’s no need to pay for anything you don’t need. While core payment methods like credit cards, mobile payments, and ACH processing are included, our app allows you to select scalable, customizable tools (like customer branding and invoicing) that fit your business needs, keeping costs affordable
To learn more about our services or to receive a custom quote, reach out to us at Stax today. We’d be happy to discuss your needs and help you set up online payment solutions that are a perfect fit for your business.
