Understanding the nature of Payment Gateway For Your Mobile App

How To Integrate a Payment Gateway For Your Mobile App

In the recent year, Businesses have seen this massive shift from desktop to mobile devices which has forced them to develop apps with built-in integrated payment gateways. But when it comes to payments, mobile apps have to contend with a few unique challenges. In addition to the usual concerns around security and compliance, there’s also the issue of user experience. A bad payment experience can lose customers and damage your brand. That’s why it’s so important to get the mobile experience right, particularly regarding payments.

As with eCommerce and traditional payment systems, mobile commerce requires a payment gateway. A payment gateway solution is a service that authorizes credit card payments and processes them on behalf of the merchant. Through Visa, Mastercard, Apple Pay, or money transfers, the gateway enables more payment options for users and businesses.

There are many different payment gateways available, each with its strengths and weaknesses. The right solution for your business depends on your specific needs.

In this article, we will cover the ins and outs of payment gateways, why it’s wise to integrate one with your app, and how to actually do it.

  • Why Would Companies or Developers Want a Mobile App Payment Gateway?
  • Features to Look for With Your Mobile Payment Gateway Integrations
  • How to Choose the Right Payment Gateway for Your App
  • Step By Step Guide to Integrating Your Payment Gateway With Your Mobile App

Why Would Companies or Developers Want a Mobile App Payment Gateway?

Mobile commerce represents 31% of all retail eCommerce sales in the USA, and mobile apps have particular pulling power. Fifty-three percent of smartphone users choose to buy company-specific apps from the Apple app store or Google Play marketplace rather than mobile websites. And the conversion rates for apps are three times higher than typical online payments through mobile sites.

Mobile app development and adoption increase yearly, so these statistics will only continue to grow.

There are a lot of upsides to integrating payments into mobile apps. Even beyond the market growth, there are several other reasons why you might want to consider integrating a payment gateway into your mobile app:

Make it easier for customers to pay

Integrating a payment gateway into your mobile app makes it easier for customers to pay. They can do so without having to leave the app, which makes for a better user experience.

In addition, customers are more likely to complete a purchase if they don’t have to go through the hassle of inputting their payment information into a mobile website.

Generate repeat business

When you make it easier for customers to pay, they’re more likely to do business with you again. Industry data shows that when it comes to marketing spending, 82% of companies agree that it’s cheaper to invest in retention than acquisition.

By integrating a payment gateway into your mobile app, you can streamline the payment process and make it more convenient for customers. This, in turn, will lead to more repeat business.

It’s good for branding

When you integrate a payment gateway into your mobile app, you can control the payment experience and make sure that it’s in line with your brand.

On the other hand, a bad payment experience can damage your brand and cost you, customers.

Features to Look for With Your Mobile Payment Gateway Integrations

Assessing the features of prospective payment gateways for your mobile app will help you determine which payment gateway meets your needs. Some of these will be standard across providers but with differences from brand to brand. Other features are unique.

Merchant account

When setting up your payment gateway, you will be required to set up a merchant account. This type of account allows you to process credit card payments through the payment gateway and receive those funds back into your bank account.

There are two types of merchant accounts:

  1. Dedicated
  2. Aggregate

A dedicated merchant account is a stand-alone account that is used only for your business. These accounts give merchants more control over how their money moves, but this does come at a higher cost than an aggregate option.

An aggregate merchant account is a shared account that is used by multiple businesses. This type of account is easier to set up, but there are no regulations in place to dictate how providers handle your funds.

Payment gateway

Like the merchant account, there are two options for payment gateways.

  1. Hosted off-site
  2. Integrated into your store

A hosted off-site gateway takes the customer away from your site to complete the transaction. This can be disruptive to the user experience, and it can also make it more difficult to track conversions.

An integrated payment gateway is embedded into your app through payment APIs, which makes for a seamless user experience. This type of gateway is also easier to track, which can be helpful for conversion rate optimization.

As with web development, it’s important to consider the user experience. Integrating the payment gateway into your mobile app gives the benefits discussed above. Gateways hosted off-site are more often used by small businesses or those with low app traffic. These solutions don’t always allow you to retain the customers’ card data, meaning they will need to input this information for each transaction.

Payment gateways APIs

Payment gateway APIs allow you to integrate the payment gateway into your app. This gives you more control over the user experience and allows you to track conversions more easily. APIs, like the Stax API, allow you to customize your payment gateway integration with functionality like email or text invoices, single or recurring payments, and various other options.

Some payment gateways will provide their own APIs, while others will use third-party APIs. Always look at the APIs that give you the greatest insight into your payments.

Recurring billing

If you plan on charging customers on a regular basis, you’ll need a payment gateway that supports this. Not all payment gateways support recurring billing, so it’s important to check before you sign up for a service.

Multi-currency support

If you plan on doing business internationally, you’ll need a payment gateway that supports multiple currencies. You may even wish to accept cryptocurrencies like Bitcoin. Not all gateways support this, so it’s something to consider before you make your decision.

Security

When it comes to payments, security is always a top concern. You’ll want to make sure that the payment gateway you choose has the latest security features in place. This includes PCI compliance (PCI DSS: Payment Card Industry Data Security Standard), data encryption and tokenization, and fraud prevention. All of this helps you minimize chargebacks, and it keeps your customers’ card details safe.

Customer support

Things can sometimes go wrong when dealing with payments. As such, it’s important to have a payment gateway that offers excellent customer support in case you need help.

Scalability

As your business grows, you’ll want a payment gateway that can scale with you. This means that the gateway should be able to handle an increase in transactions without any issues.

Consider this from both the perspective of the gateway and the payment processor. Switching service providers as your business scales can present frustrating technical challenges. Start first with a payment processor that can grow with you.

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How to Choose the Right Payment Gateway for Your App

Now that you know the basics of payment gateways, here are a few things to remember as you compare providers.

Identify your requirements

The first step is to understand your needs. What type of business do you have? Are you selling digital goods, physical goods, or services? Do you need to support multiple currencies? Do you need recurring billing? What app frameworks and languages do you need the gateway to integrate with? Once you know what features you need, you can start to compare providers.

Know the costs

Next, take a look at the fees. Payment gateways typically charge setup fees, a per-transaction fee, and some also have annual or monthly fees. You’ll want to compare the total cost of each provider to see which one is the most affordable. Stax, for example, offers monthly membership fees, which keep fees low and ensure there are no surprises.

Evaluate the user experience

Consider the user experience. The payment gateway services you choose should offer a smooth checkout experience and make it easy for your customers to pay. It should also be easy for you to track conversions and manage your payments.

Top Mobile Payment Gateway Providers

There are many mobile payment gateway providers to choose from. Here are a few of the best payment gateways for mobile app purchases:

Stax

Stax is a mobile payment gateway that offers an easy-to-use API for developers. It provides all the features you need to accept payments in your app, including recurring billing and multi-currency support. Its simple-to-use SDK (software development kit) makes it easy to add payments to your mobile application with just a few lines of code. And monthly membership fees make it easy to keep your costs low.

Braintree

Braintree offers a simple API that makes it easy to accept payments in your app. Braintree also provides a number of other features, such as fraud prevention and customer support.

PayPal

Paypal is a popular brand, offering a complete solution for online and mobile payments. It provides a solid API, as well as several features such as recurring billing and customer support.

Stripe

Stripe is another popular payment gateway that offers a payment API. It provides recurring billing, multi-currency support, and fraud prevention. It also offers an SDK that lets developers quickly add payments to their app with just a few lines of code.

Adyen

Like the others, Adyen has an API and all the features you need to accept payments in your app, including recurring billing and multi-currency support. It also has an SDK that makes it easy to add payments to your app with just a few lines of code.

Authorize.net

Authorize.net is a popular payment gateway in Canada and the US with all the features of those above; easy-to-use API and all the features you need to accept payments in-app, including recurring billing and multi-currency support.

Step By Step Guide to Integrating Your Payment Gateway With Your Mobile App

While the exact procedure for implementing a payment gateway for the mobile App may vary from one provider to the next, here are some general steps to keep in mind.

1. Set up a merchant account

The merchant account required is through your payment processor, the organization that processes your credit/debit card transactions. Ideally, your payment processor will be the same company as the payment gateway provider. This allows you to manage everything from one central system.

2. Create an account with the payment gateway provider

Although your payment processor may be the same as the gateway provider (such as if you were to work with Stax), this is a service within the broader solution and will need its own setup.

You will set up the details of your account and connect it to your merchant account.

3. Obtain the necessary API credentials

API stands for “Application Programming Interface”. The payment gateway API is how the gateway will communicate with your app to process transactions.

To get started, you need to generate the API credentials from the payment gateway provider. This usually requires creating a test account first in order to avoid processing any real payments during development and testing.

4. Configure the payment gateway

The next step is to configure the payment gateway. This includes specifying the types of payments you want to accept, such as credit and debit cards, as well as setting up any other options such as recurring billing or fraud prevention tools.

5. Implement the payment gateway into your app

Now, you’re ready to start coding. The payment gateway provider will give you the necessary code snippets and documentation to help you get started.

You will need to implement the code into your app, which will handle the process of sending transaction data to the payment gateway and receiving confirmation back.

For both Apple’s iOS app and Google’s Android app, the steps to integrate your payment gateway are essentially the same. The programming languages may be different, but the process is similar.

a. Start accepting cards by using the Drop-in UI

The Drop-in UI is just a few lines of code that need to be embedded into your app’s code. You will get this code from your payment gateway provider.

b. Generate a client token with your server

A client token is a secure identifier that is used to initialize the Drop-in UI. This token is generated with your server and passed to your app. For every new app launch, you should generate a new client token.

c. Test your integration

Once you’ve completed the integration, it’s important to test it to make sure everything is working as expected.

6. Launch your app with the payment gateway integration

After you’ve completed testing and are satisfied that everything is working properly, you’re ready to launch the app payment gateway integration.

Just keep in mind:

  • The steps may vary slightly depending on the payment gateway provider you choose.
  • It’s important to consult your developer or development company before choosing a payment gateway or processor, as they will be the ones integrating it into your app.
  • Be sure to test your integration thoroughly before launching your app to avoid any issues with processing payments.

For seamless payment gateway integration into your mobile app, the Stax API is your ideal solution. We offer a complete suite of tools to help you build, test, and launch your app with ease. And our comprehensive payment processing platform covers all of your payment processing needs online, in-store, and mobile.

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Payment Gateway


FAQs about Payment Gateway

Q: What is a Payment Gateway for a Mobile App?

A Payment Gateway for a mobile app is a service that authorizes credit card payments and processes them on behalf of merchants. It helps facilitate financial transactions, supports different payment methods, and offers security features to protect payments.

Q: Why is integrating a Payment Gateway into a Mobile App necessary?

Integrating a Payment Gateway into a mobile app allows customers to easily make payments without leaving the app, improving the user experience. With a smooth payment process, customers are likely to complete purchases, generate repeat business, and contribute to brand loyalty.

Q: What factors should be considered while choosing a Payment Gateway for Mobile Apps?

It is crucial to consider features like recurring billing, multilingual and multi-currency support, scalability, data security compliance, and customer support service. Moreover, the overall cost, including setup fees, transaction fees, and possible annual or monthly fees, should be factored in.

Q: What features should Mobile Payment Gateway integrations possess?

Payment Gateways should have features such as dedicated or aggregate merchant accounts for processing transactions, integrated or hosted off-site options, API capabilities for efficient integration, and recurring billing options. They should also offer multi-currency support, robust security measures, excellent customer support, and scalability.

Q: How can Payment Gateways for Mobile Apps be integrated?

Although the exact procedure may differ according to the chosen provider, typically, businesses first need to set up a merchant account with a payment processor. Next, create an account with the payment gateway provider and obtain necessary API credentials. Post configuration of the payment gateway, code snippets from the provider need to be implemented into the app. After thorough testing, the app can be launched with payment gateway integration.

Q: What are some popular Payment Gateway providers for Mobile Apps?

A few renowned mobile payment gateway providers include Stax, Braintree, PayPal, Stripe, Adyen, and Authorize.net. These providers offer diverse features like easy-to-use APIs, recurring billing, multi-currency support, and convenient setup processes.

Q: Why are Payment Gateway APIs important?

Payment Gateway APIs are crucial as they allow seamless integration of the payment gateway into mobile apps. They provide control over the user experience and enable easier conversion tracking. They can also assist in personalizing payment gateway integration, such as sending invoices via email or text or setting up single or recurring payments.

Q: What is a Merchant Account, and what are its types?

A merchant account allows businesses to process credit card payments through the payment gateway and receive those funds back into their bank account. There are two types: A dedicated merchant account used only for individual businesses, giving merchants more control over their money movements, and an aggregate merchant account used by multiple businesses, which is easier to set up but lacks regulations on how providers handle funds.

Q: How does a Payment Gateway contribute to a brand’s image?

An integrated payment gateway allows businesses to control the payment experience aligned with their brand. A smooth and secure transaction process can boost brand perception, while a poor one can potentially damage the brand image and customer trust.

Q: What are the security considerations while choosing a Payment Gateway?

A chosen Payment Gateway should comply with up-to-date security standards, like PCI DSS (Payment Card Industry Data Security Standard), data encryption, and tokenization, and have effective fraud prevention measures. These features assure secure transactions, reduce the risk of chargebacks and protect customer’s payment information.


 

Payment APIs: What Are They and How Do They Work?

In 2021, an estimated $768 billion was made in retail eCommerce revenue; by 2025, it’s estimated to exceed $1.3 trillion in the U.S. As more businesses delve into the world of eCommerce to sell their goods, it’s becoming increasingly common to allow customers to make online payments using various methods. In fact, one of the most common ways to offer payment processing solutions to your customers is by using a payment API or payment gateway API.

From credit cards to bank payments, APIs are necessary to ensure a streamlined checkout experience, both for merchants and customers. But what exactly are payment APIs, and why do they matter? In this article, we’ll explain what they are, how they work, and what the best payment APIs on the market are.

What’s a Payment API?

First things first: API stands for application programming interface. A good way to view APIs, says Stax’s Lead Software Engineer Austin Kelsch, is they enable computers to connect or interface with other computers.

“Most simply put, an API is a way for computers to talk to computers. From the computer’s perspective, it’s an easy way to make those conversations happen.”

As far as payments are concerned, APIs enable apps and eCommerce sites to accept payments by ensuring that all entities involved in that process—i.e., the processor, gateway, eCommerce platform, etc.—can “talk” to each other.

A payment API works by seamlessly adding payment processing capabilities to your existing software and mobile apps. Essentially, it allows one or more programs to interface and communicate with other programs, allowing merchants and eCommerce retailers to better manage the payment experience.

Payment APIs are generally customizable and allow businesses to configure their payment processing infrastructure. Instead of being limited to a pre-set payment setup, you can use APIs to create custom credit or debit card processing setups, unique to your eCommerce business.

What Can Payment APIs Do?

If a customer completes an online payment on your eCommerce site or app, a payment API is likely facilitating the purchase process.

According to Austin, a payment API primarily links “a customer and their form of payment (e.g., credit card, bank transfer) to a dollar amount and then a merchant.”

He adds that APIs facilitate “a two-party relationship (i.e., the customer and merchant) that are sending money between those two parties.”

“Ultimately,” says Austin, “the payment information has to get sent from a payment form or app along to a service that can accept it, and that exchange is where the API piece comes in.”

However, that’s just one of the many core functionalities that payment APIs provide to eCommerce and retail vendors, including the ability to:

  • Issue refunds for online payments and allow for instant settlement.
  • Enable recurring payments, which is particularly useful for subscription-based or SaaS businesses.
  • Integrate local and global payment options (bank transfers, digital wallet payments, credit card and debit card payments, etc.)
  • Track orders and access real-time payment data on transactions, making it easier to settle payments.
  • Easily accept and reach customers in international markets.

In short, payment APIs provide many opportunities to streamline and facilitate the checkout experience of eCommerce customers and software users.

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What Are the Benefits of Using a Payment API?

Payment Api Benefits

While there are several reasons most eCommerce merchants use payment APIs, some of the more prominent ones are:

  • They offer a frictionless checkout experience. Payment APIs make it easy for merchants to offer consumers a variety of payment methods, improving the overall customer experience. On the merchant side, they help to automate the payment process, giving merchants back valuable time and resources (particularly for recurring payments).
  • They offer increased security. It’s easy to minimize the risk of fraud with a payment processor API, which offers improved security through payment authentication (such as with tokenized payments) and included compliance checks.
  • They simplify regulatory compliance. A reliable payment provider will make it easy to ensure that you’re compliant with the latest payment regulations and standards, such as surcharging laws, ASC 606, and more. With a single source of truth, SaaS and eCommerce companies can quickly comply with current and future regulations by using a payment API.

3 Factors to Consider When Choosing a Payment API

There’s a wide variety of payment processing service providers available, so it’s important to compare the services and fine print when choosing a payment API. There are several factors you should be aware of when shopping for your payment provider, including:

1. Features

The first consideration, says Austin, would be the payment API’s capabilities.

“What are the solution’s features? Do they line up with the product you’re trying to build, with the products you’re currently trying to sell, with what your current website does, and those different types of payment methods you want?”

He adds that asking these questions will point you in the right direction.

“For instance, if you must accept bank payments, then you should look for an API that can do ACH.”

He continues, “Those sorts of feature analyses are probably the first thing you’d want to do [when looking for an API].”

2. Pricing

It’s important to choose a payment API provider that offers transparent pricing. While you don’t necessarily need to choose the cheapest provider (you might be sacrificing important features), it’s important your payments partner is straightforward and upfront about their offerings. Is it flat-rate? Do they take a certain percentage? Are you tied to a contract for a long period?

This is one of the areas where Stax stands out because we offer a flat subscription fee with no long-term contracts.

According to Austin, “Stax tries to make this easy to rationalize because our emphasis is on a subscription model. With fee-based pricing, it’s a lot harder to know exactly what those costs look like.”

3. Ease of use and integration

The payment API interface you use should offer a great user experience, both for you and your customers. Is it easily accessible and usable? Is there clear documentation for integration and implementation? Do they offer sample code and tutorials?

Austin notes that documentation is an important factor when it comes to selecting a payment API.

“It’s a critical piece of the API vetting process; not having adequate documentation is a red flag,” he adds.

Ideally, your provider should offer a SDK (software development kit) to set up an API sandbox easily, the most common one being a REST API. If it’s simple to set up and integrate, like with third parties and other business tools, it’s probable that your provider can scale up with you as you continue to grow.

It’s important to note that the above isn’t an exhaustive list of factors to consider. Other things to keep in mind include the level of customer support, its compliance and security standards, and other functionalities you may need specific to your eCommerce business. Take the time to speak to the team of your potential payment API provider so you feel confident that you’ve made the right choice.

The Top Payment API Providers on the Market

To make your research easier, we’ve compiled a list of the biggest payment APIs on the market and a brief overview of their selling points.

Stax

Stax’s payment API makes payments on websites and apps as streamlined as possible. Whether you need to make single or recurring payments in-person or online, using ACH or mobile payment, our industry-leading APIs make it easy as 1-2-3. We use a RESTful API and provide SDKs for iOS and Android in Javascript and Python, but it’s fully compatible with all programming languages, making it easy to create a secure checkout process that matches your website’s visual style.

We work with a variety of third parties and other business tools for easy integration and make it easy to accept both card present and CNP payments.

Of course, we utilize the latest security standards, keeping all customer and payment data fully secure using state-of-the-art risk management protocols for Level 1 PCI compliance. And with transparent, subscription-based pricing, you’ll avoid unwanted surprises and hefty fees down the road.

Square

Square bills itself as a full-stack payment service, offering much more than just payment APIs, as it also provides hardware such as card readers. It’s used by a mix of both eCommerce and brick-and-mortar stores, since Square offers features such as marketing and loyalty programs.

It’s important to note that Square doesn’t accept bank payments or currency conversion, which may be important depending on your customer base. And with their recent pricing policy change, it’s likely your eCommerce business will take a substantial hit in fees.

Stripe

Also billed as a full-stack payment processor, Stripe Payments is often seen as the competitor to Square with all-in-one payment processor and gateway services available in several countries. They provide extensive documentation in various programming languages, but due to its feature-rich complexity, it can be difficult for smaller organizations without an extensive budget or coding experience to set up.

With a predominant and stronger emphasis on online payments, Stripe may also not be the best solution for retail or hybrid business models, so it’s important to keep that in mind as your business scales up.

Authorize.net

Authorize.net is one of the oldest payment gateway providers in the eCommerce space, and remains a popular option for credit card processing services with reliable security. It’s well-known for being an industry standard, but it’s important to note that they do not provide merchant accounts, which means businesses will need to go through a third party to set one up.

Adyen

Adyen is often used by companies dealing with a high amount of international transactions. They also provide a wealth of integrations and APIs for a comprehensive set of payment services, from POS to mobile payments, including strong risk management features.

However, they use a hybrid pricing system, charging different rates depending on the payment (for example, Visa and American Express have different fees). Combined with a monthly invoice minimum dependent on your business model, it’s easy for costs to skyrocket and isn’t a viable alternative for smaller businesses.

Wrapping Up

If you’re an eCommerce business looking to set up a payments ecosystem with robust payment APIs, it’s important to take into consideration a number of factors to find the best provider for your business.

With a little bit of research, you’ll be able to find the right payment API provider for you, so you can sustainably grow and scale up your business, setting your eCommerce organization up for success in the long run.

Stax’s industry-leading Payment API makes it easy for eCommerce merchants of all sizes to quickly enable and accept all types of payments. Not only do we streamline the entire process, we offer straightforward, subscription-style pricing, Level 1 PCI compliance, and powerful data and analytics for a truly comprehensive payment ecosystem.

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Quick FAQs about Payment APIs

Q: What is a Payment API?

A Payment API is an application programming interface that enables apps and eCommerce sites to accept payments by ensuring communication between all entities involved in the payment process, such as the processor, gateway, and eCommerce platform.

Q: How do payment APIs work?

Payment APIs work by seamlessly adding payment processing capabilities to existing software and mobile apps, allowing programs to interface and communicate with each other to better manage the payment experience for both merchants and customers.

Q: What can payment APIs do?

Payment APIs can issue refunds, enable recurring payments, integrate local and global payment options, track orders, provide real-time payment data, and easily accept and reach customers in international markets.

Q: What are the benefits of using a payment API?

The benefits of using a payment API include a frictionless checkout experience, increased security, simplified regulatory compliance, and overall improved customer experience and management of the payment process.

Q: What are the factors to consider when choosing a payment API?

When choosing a payment API, consider features, pricing, ease of use and integration, documentation, and customer support. Also, evaluate its compliance and security standards and any specific functionalities for your eCommerce business.

Q: What are some top payment API providers on the market?

Some of the top payment API providers on the market are Stax, Square, Stripe, Authorize.net, and Adyen. Each provider has its own unique selling points and different capabilities, so it’s important to research and compare their offerings.

Q: What should I look for in a payment API in terms of pricing?

Choose a payment API provider that offers transparent pricing with clear and upfront information about the costs involved. It’s essential to understand the pricing structure, whether it’s flat-rate, percentage-based, or subscription-based, and whether contracts or hidden fees are involved.

Q: What is the importance of documentation in payment API selection?

Documentation is crucial when choosing a payment API, as it details the API’s features, capabilities, and integration process. Adequate documentation helps developers understand the API, its functions, and how to implement it properly.

Q: What aspect of security should I consider when selecting a payment API?

Ensure the payment API provider utilizes the latest security standards and follows risk management protocols for PCI compliance. Look for features such as payment authentication, tokenization, and built-in compliance checks to minimize the risk of fraud.

Q: Why is the ease of use and integration important in a payment API?

Ease of use and integration is essential because it affects your user experience and the time required for implementation. A user-friendly payment API with clear documentation, sample code, and tutorials makes it easy to set up, integrate with other tools, and scale up as your business grows.


 

B2B Credit Card Processing: Overview, Fees, and How It Works

Credit card usage in the United States has never been higher and over 90% of Americans own at least one credit card. Though the way in which they are used and processed has evolved over time, the popularity of credit cards has only increased since the first universal credit card was introduced to the US by Diner’s Club in 1950.

Convenience, both for the buyer and the seller, is one of the primary reasons for the enduring appeal of the credit card, making it increasingly important for merchants to be able to accept payments by credit card today. But how do merchants process credit and debit card payments and what is meant by a pre authorization on a credit card?

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What Does Pre Authorization Mean?

In the world of electronic payment processing, a credit card pre-authorization refers to the process of placing what is effectively a holding charge on a customer’s credit card. The issuing bank checks to ensure that the customer’s payment can go through and there are sufficient funds available to cover the requested amount, without actually debiting the cardholder’s account right there and then.

This pre-authorization hold places the authorized funds into a temporary reserve to prevent the customer from withdrawing or spending that money elsewhere. It’s effectively giving the original merchant priority over a particular pool of cash in the customer’s account. The possible reasons for wanting to do this are laid out below.

How Do Pre-Auths Work?

Any merchant able to accept payments by credit card will have a relationship with a payment gateway provider that allows for the processing of electronic payments. Payment gateways exist within physical credit card processing terminals as well as online, as part of a portal for accepting eCommerce payments, and can be configured based on the needs of the merchant.

By adjusting the settings in their payment gateway, merchants can activate the functionality to pre authorize customer payments, sometimes called a reserve (because you’re reserving the funds from the available balance of that customer’s credit limit). Once set up, it’s possible to pre authorize a transaction amount, allowing for all the benefits this entails. More on that below.

How Long Do Pre-Authorizations Last?

Typically, a pre-auth will be set to expire after five days if no further action is taken by the merchant, though this can depend on your Merchant Classification Code (MCC). There are some cases where standard pre-auths will invariably need to be longer and this should be reflected by the appropriate MCC that has been assigned to your merchant account.

If a merchant is regularly having to process pre-auths for periods beyond five days, they’d typically need to arrange with their credit card processor to reassess their currently assigned MCC.

The alternative is to run the pre-authorization again after the original five-day pre-auth has expired, but this won’t always guarantee funds remain available so it’s wise to try and implement a longer pre-auth period where more than five days per transaction is regularly required.

What Are Pre-Auths For?

There are a number of common use case scenarios for pre authorizing payments via credit card, particularly within the travel sector. For instance, car hire companies normally require that a customer commits to paying for any damages they might cause during the period of their rental by putting down a security deposit. This security deposit is usually claimed via a pre-auth charge, holding the authorization amount for the rental company to deduct any funds to cover damages (or fines) upon return of the vehicle.

In a similar fashion, hotels and vacation rental property operators tend to request pre-authorization on a credit card before allowing guests to check in. For hotels, this ensures that the guest can’t rack up a bill (e.g. for room service or use of facilities incurring an extra charge such as a spa or laundry service) they later don’t pay for (intentionally or otherwise).

While for vacation rentals, such as an Airbnb, the pre-auth acts as a security deposit, much like it does for the rental car company, ensuring funds can be claimed for any damages that might be caused during the stay.

Of course, the travel industry isn’t the only sector in which pre auths are popular. Ultimately, they can be utilized in any situation where a merchant or service provider wants to cover themselves against loss or damage.

Customers might also find their card is pre-authorized before being allowed to fill up at a self service gas station, to ensure that they can’t leave with more than they’re able to pay for.

What Are the Benefits of Pre Authorizations?

Now that we’ve covered the benefits of pre authorizations, let’s look at the benefits of implementing them.

Merchant protection. The primary benefit of a pre-auth is in offering protection to the merchant. It provides security and cover in situations where there might otherwise be a risk of loss or damage. This is more secure and less risky than accepting cash deposits for the same purpose. Cash can be lost or stolen whereas a pre-auth can’t be reversed by the customer via a chargeback, a common technique used by fraudsters.

Curbs payment processing fees. Pre-auths carry the advantage of incurring no payment processing fees until a final charge is processed, whereas a full charge and subsequent refund would incur fees at both ends of the transaction (i.e. fees for processing the initial payment along with refund fees).

This is particularly useful in situations where you might wish to automatically process payments before determining whether you can actually fulfill the order.

Let’s say you have an online store that a customer has ordered from but on closer inspection, you determine you’re out of stock of the requested item(s) or you can’t ship to their location. Rather than having to refund the customer’s credit card transaction and paying the associated fees, you can simply release the funds from the pre-auth and nobody would be charged anything.

Makes funds more accessible, compared to refunds. There are benefits from the customer’s perspective too, as the release of reserved funds for a pre-auth is immediate, providing them with instant access to their previously earmarked money. This is in contrast to the method by which funds that have already been taken through a regular credit card transaction are later refunded, which can take several days.

Gives customers peace of mind. One further fringe benefit to the merchant is in being able to offer peace of mind to the customer. The commitment to not actually charge a customer unless or until certain conditions are met can help persuade them to buy from you, which improves conversion rates on a website and acts as a convincer helping with a salesman’s pitch.

Are There Any Downsides to Pre Auths?

As a merchant, the main risk with a pre-auth is allowing the reserved funds to be released automatically, before the transaction is complete.

As previously discussed, there is a standard five-day period for most pre-auths, after which time if no further action is taken the pre-auth will expire and the customer will regain full access to their funds.

This is why it’s important for merchants to keep on top of the period of time since the initial pre-auth was made and if it looks to be coming to an end before you’ve settled your original transaction with your customer a prompt reattempt at the pre-auth would need to be made.

There could be a very narrow window within which to commit your second pre-auth if the customer is savvy enough to recognise when the pre-auth will expire and is ready to exploit it.

Of course, most customers aren’t going to be counting down the minutes until the pre-auth runs out but it’s still something to be aware of in a world where credit card fraud is on the rise.

Final Words

Would being able to accept pre-auths benefit your business? Stax enables you to easily implement pre authorizations, so you can streamline your operations and enhance customer satisfaction. Contact us to learn more.

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What Is Cardholder Data and What Is Its Role In PCI Compliance

All businesses that accept card payments may find it difficult to understand the ins and outs fo payment processing, particularly when it comes to data security. Staying in compliance with the Payment Card Industry Data Security Standard (PCI DSS) means understanding the basics of how cardholder data should be handled. To help guide business owners through the sea of acronyms and technical terms, here is helpful information on what exactly cardholder data is and how to protect it to stay in PCI compliance.

What is Cardholder Data?

Embedded within every debit or credit card transaction is a wealth of data. The Payment Card Industry Security Standards Council (PCI SSC) issues the standards for PCI compliance and seeks to, “enhance global payment account data security by developing standards and supporting services that drive education, awareness, and effective implementation by stakeholders.”

Simply put, the council aims to safeguard payment data and prevent fraud by establishing standards that must be followed by anyone handling sensitive payment information (i.e., businesses, merchant services providers, etc.).

The PCI SSC defines cardholder data as the full Primary Account Number, commonly known by the acronym PAN. In addition to the PAN, “cardholder data can include cardholder name, expiration date, and/or service code”.

This information is valuable and desirable to bad actors, so encrypting and tokenizing cardholder data is extremely important. The PAN, cardholder name, and card expiration date are the primary components of cardholder data and are easy concepts to comprehend..

However, there are a few other key elements of cardholder data and a number of other terms that are important to understand related to payment processing.

The complete list of terms associated with payment processing codes is expansive. Here are some of the most common terms and acronyms associated with cardholder data.

[2×4 “Dictionary” Table? Or bullets]

CHD simply means Cardholder Data, and is also sometimes shortened to “CD”.

PAN stands for the primary account number and is the unique card number associated with credit and debit cards. The account number identifies both the issuer and cardholder for the account.

PIN stands for Personal Identification Number and is a number known only to the user and system, used to validate debit card and ATM transactions.

Service Codes are the three or four-digit codes following the expiration date of the card and make up a large portion of the PCI “alphabet”. There are a variety of uses for these codes such as differentiating local or international transactions or identifying usage restrictions. These codes are referred to by a number of acronyms, each associated with either data from the magnetic stripe or printed security features on the card.

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The codes associated with magnetic stripe data are:

  • CAV – Card Authentication Value, used for cards issued by JCB
  • PAN CVC – Card Validation Code, used for MasterCard payment cards
  • CVV – Card Verification Value, used for Visa and Discover cards
  • CSC – Card Security Code, used for American Express payment cards

The various card brands also use a secondary card certification which is printed on the card. For JCB, MasterCard, Discover, and Visa, this is a three-digit code on the signature panel on the back of the card. For American Express, this is a four-digit code above the card number on the front of the card.

These codes are all unique and specifically tied to the PAN:

  • CID – Card Identification Number, used for American Express and Discover card payments
  • CAV2 – Card Authentication Value 2, used for JCB card payments
  • PAN CVC2 – Card Validation Code 2, used for MasterCard card payments
  • CVV2 – Card Verification Value 2, used for Visa card payments

A few additional important terms related to PCI compliance include:

CDE – Cardholder Data Environment and refers to,“ people, processes, and technology that store, process, or transmit cardholder data or sensitive authentication data.”

SAQ – Self-Assessment Questionnaire and is a reporting tool to document results from a PCI DSS assessment.

Truncation – This is the method of making the full PAN unreadable through the removal of a segment of PAN data. This is related to protecting the PAN when stored digitally in databases or files. When displayed or printed, this is called masking.

QSA – Qualified Security Assessor. A QSA is qualified by the PCI SSC to perform on-site assessments to validate if the merchant is in compliance with the PCI DSS.

While there are many more terms associated with payment processing, most businesses would admit they’re not fully versed in all PCI terms and definitions. The fundamentals of protecting cardholder data and staying PCI compliant are ultimately done through using trusted and approved payment processors and implementing secure practices when handling cardholder data.

Clarifying Cardholder Data Misconceptions

Given the wealth of information associated with cardholder debit and credit card data, it’s unsurprising there is some confusion, even in the industry, as to what constitutes cardholder data. Some believe the data is only made up of the PAN and associated security code, but according to the PCI Security Standards Council, it is a combination of the cardholder name, PAN, expiration date, and security code.

Understanding and Maintaining PCI DSS Compliance

The PCI security standards council is clear that it is, “paramount for every merchant, financial institution or other entity that stores, processes or transmits cardholder data.” The purpose of the standards is to protect cardholder data by providing a set of operational requirements for merchants processing credit and debit card transactions.

Another purpose of the standards is to align payment processing software companies with technical details needed for point-of-sale (POS) software and hardware.

PCI Security Standards encompass four areas:

  • PCI Data Security includes technical and operational standards connected to cardholder data. This covers everything from building and maintaining a secure network and protecting stored cardholder data, to monitoring and testing networks and maintaining an information security program.
  • PCI PTS Requirements translates to PCI PIN Transaction Security Requirements. This is focused on protecting cardholders’ PINs and payment processing-related activities. Manufacturers of payment processing software and terminals must follow these requirements in every step of the process, from design to implementation.
  • PA-DSS Security means Payment Application Data Security Standard and applies to software vendors or any others that develop payment applications used to process, transmit or store cardholder data.
  • Point-to-Point Encryption or P2P Encryption requires merchants to encrypt the transmission of cardholder data to make it unreadable to unauthorized parties. A combination of security standards and validated software are imperative to ensure P2P encryption and data security are upheld.

5 Ways to Protect Cardholder Data

Maintaining PCI compliance takes dedicated effort and resources. Below are five ways merchants can protect cardholder data.

  1. Only use software and hardware from trusted service providers that are approved by the PCI security standards council. Choosing a trusted payment processor is your first line of defense in protecting customer cardholder data and ensures software is compliant, encrypted, and secure.

Take Stax, which is a certified Level 1 PCI service provider. This is the highest level of PCI compliance, and it guarantees that our services comply with the council’s most rigorous requirements.

  1. Develop and maintain an information security program. This includes regular maintenance of firewalls, conducting regular program audits and updating and updating all technology.
  2. Never store cardholder data on paper, and limit the storage of payment information in general. If cardholder information must be kept, merchants are required to develop a strategy to securely store and protect this information.
  3. Create a culture in your organization that prioritizes its security policy. This includes regularly training employees on cybersecurity best practices. This is another important step in meeting PCI DSS requirements.
  4. Regularly check the physical security of payment terminals for skimming devices or rogue software. In addition to the threat of a data breach, point-of-sale systems can also be physically compromised and should be regularly assessed.

Final Words

Protecting cardholder data and maintaining PCI DSS compliance go hand in hand. A combination of policy and procedure at the merchant level and partnership with a trusted payment processing provider is key to staying in compliance and maintaining cardholder data protection. By choosing a payments platform and following guidance provided by the PCI Security Standards Council, merchants will be well-positioned to stay PCI compliant and protect their customer’s cardholder data.

Stax offers solutions that promote PCI compliance and keep transactions secure. Get in touch and learn more about how we can help you safeguard your business’ and customers’ payment data.

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FAQs about Cardholder Data

Q: What is Cardholder Data?

Cardholder data, defined by the Payment Card Industry Security Standards Council (PCI SSC), refers to the full Primary Account Number (PAN), which can include the cardholder name, expiration date, and/or service code. These components are significant in making secure transactions and hence, data security is crucial.

Q: What is the role of Cardholder Data in PCI Compliance?

The essential role of cardholder data in PCI Compliance is to ensure secure payment transactions. PCI DSS sets standards that require businesses, merchant services providers, and all those handling sensitive payment information to secure cardholder data, primarily the PAN, cardholder name, and expiration date.

Q: What is the PCI Security Standards Council?

The PCI Security Standards Council (PCI SSC) is a body that sets the standards for PCI compliance. Their aim is to bolster global payment account data security by evolving standards and supporting services that aid education, awareness, and efficient implementation by stakeholders.

Q: What is the primary account number (PAN)?

The Primary Account Number (PAN) is a unique card number associated with credit and debit cards. The PAN identifies both the issuer and the cardholder of the account, playing an integral part in card transactions.

Q: What is the Cardholder Data Environment (CDE)?

The Cardholder Data Environment (CDE) refers to the people, processes, and technology that store, process, or transmit cardholder data or sensitive authentication data.

Q: What does PCI DSS Compliance involve?

PCI DSS Compliance is paramount for any entity that stores, processes, or transmits cardholder data. It involves a set of operational requirements for these entities, tech specifications for point-of-sale (POS) software and hardware, and comprehensive requirements addressing various areas such as PCI Data Security, PCI PTS Requirements, PA-DSS Security, and Point-to-Point Encryption.

Q: How can businesses protect Cardholder Data and ensure PCI Compliance?

Businesses can protect cardholder data and ensure PCI compliance through measures like using approved software and hardware from trusted service providers, maintaining an information security program, limiting the storage of payment information, regularly training employees on cybersecurity best practices, and regularly assessing the physical security of payment terminals.

Q: Is it necessary to store cardholder data?

While some businesses may require to store cardholder data, it’s important that they develop a strategy to securely store and protect this information. PCI DSS requirements stipulate that the full PAN should be unreadable through the removal of a PAN data segment, a process known as truncation.

Q: What is a Qualified Security Assessor (QSA)?

A Qualified Security Assessor (QSA) is an entity qualified by the PCI SSC to perform on-site assessments to validate if the merchant is in compliance with the PCI DSS.

Q: What role do payment processors play in protecting Cardholder Data?

Payment processors have a crucial role in protecting cardholder data. They ensure that transaction software is compliant, encrypted, and secure. Therefore, choosing a trusted and PCI-compliant payment processor is a key step to securing customer cardholder data and maintaining PCI DSS compliance.


 

What is a Card-Not-Present Transaction? Why Do CNP Transactions Matter?

Being able to offer your in-store and online customers multiple ways to make payments is extremely important. Your consumers want options, and it’s essential to meet their needs in order to reduce friction in the shopping process. But did you know that not all forms of payment are created equal?

Payment types are split up into two categories – card-present transactions (CP) and card-not-present (CNP) transactions. The differences between these two types of payments are more important than many retailers realize, and which ones you choose to accept could have a big impact on your business.

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What is the Difference Between Card-Present Transactions and Card-Not-Present Transactions?

A card-present transaction is done in-person when a magnetic stripe is swiped, the EMV chip is inserted, or a mobile wallet is tapped. Conversely, a card-not-present transaction is any transactions where the magnetic stripe isn’t swiped, the EMV chip isn’t inserted, or a mobile wallet isn’t tapped against a physical terminal. This means that any payment transaction facilitated over the phone, online, or through fax would be considered a card-not-present transaction.

A common misconception when it comes to card-not-present payments is that as long as the customer is present with their card, the payment is considered a card-present transaction.

For example, when the customer’s card information is manually typed into the credit card terminal, even if the customer is standing there with their credit card, this is still considered a card-not-present transaction by the credit card companies. This is because the physical credit card itself did not come in contact with the machine even though the transaction took place at the point-of-sale

Types of Card-Not-Present Transactions Include:

  • eCommerce shopping carts
  • Online invoices
  • Automatic billing
  • Phone orders
  • Website payments
  • Mail order purchases
  • Card-on-file transactions

How Much Do CNP Transactions Cost?

Interchange costs (charged by credit card brands like Visa and Mastercard) vary slightly from card to card across hundreds of card types. Generally speaking though, interchange costs for card-not-present transactions are higher than card-present. This is simply because the risk is higher. There is a certain level of confidence that comes along with physically inserting a card into a reader, therefore interchange costs are lower for these types of transactions.

A surprising number of companies are paying these higher interchange costs and processing fees without even having to. If you’re finding yourself taking a physical card from a customer and then manually typing in the card information into a terminal or mobile device, you’re paying card-not-present CNP interchange rates.

Avoid this by investing in a mobile card reader to be able to swipe those cards in the moment instead of entering them manually.

Card-Not-Present Fraud Risk

A study conducted by the Federal Reserve in 2018 demonstrated the decline in card-present fraud from $3.68 billion in 2015 to $2.91 billion in card-present fraud in 2016. However, during that same time, eCommerce card-not-present fraud increased by $1.17 billion. And card-not-present fraud is on the rise – with the widespread adoption of EMV or chip technology across the country, EMV chip cards make card-present fraud more difficult, and thieves are moving their fraudulent transactions from brick and mortar stores to online. Higher processing fees are a direct result of this increased risk of card-not-present fraud.

Since cardholder data is more difficult to verify in card-not-present transactions, there is a higher risk of chargeback fraud as well. When a product or service is delivered to a customer, the customer can argue that they never authorized that charge or they didn’t receive the product.

In these cases, the liabilities and fraud costs rest with the company. However, there are steps you can take to increase the security of your card-not-present transactions and continue protecting cardholder data.

1. Use a Secure Payment Gateway

First, ensure your website payments are made through a secure gateway. Investing in technology that will keep your customer’s information safe is well worth it in the long run for your business and will help secure these card-not-present transactions.

2. Capture Important Customer Information

Next, make sure you’re capturing all of the necessary information from your customer (that is more than simply requesting a credit card number) at the point of checkout.

  • Customer Contact Information: Phone number, email address, customer’s billing address, and shipping address are especially important for high-value transactions.
  • Card Information: Name as it appears on the payment card, expiration date, credit card number, and CVV (i.e., card security code) should all be required. Collecting this information helps you further determine that the customer is in possession of the credit or debit card and helps to eliminate unnecessary customer disputes.

3. Maintain PCI Compliance

Whether a payment is a card-present transaction or card-not-present transaction, businesses that handle credit card information must be PCI compliant. All business practices need to be compliant with the security standards set forth by the payment industry.

Business owners can become compliant by taking a quick questionnaire. Members with Stax are guided through this process by their account manager so all of our members and their customers stay safe and secure.

4. Use an Address Verification Service (AVS)

An Address Verification Service (AVS) is exactly what it sounds like. It’s a fraud prevention tool that verifies that the billing address entered by the shopper matches the one associated with the cardholder’s account.

These Address Verification Services serve as another layer of security against credit card fraud. Here’s how it works:

When the customer enters their credit card details, the merchant uses an AVS service to request the card issuer for authorization of these card-not-present transactions.

The payment processor then sends an AVS code back to indicate how well the entered address matches the one on file. Here are the codes for your reference.

AVS Code Description
A The street address is a match, zip does not match
G Non-U.S. card issuing bank
N Street address and zip code do not match
R Retry – system time out / unavailable
U Address data not available
W The 9-digit zip code is a match, street address does not match
X Street address and 9-digit zip code both match
Y Street address and 5-digit zip code both match
Z The 5-digit zip code is a match, but the street address does not match

Based on the degree to which the billing address matches, the merchant can decide whether or not to approve an order.

Note that the above steps all take place during the authentication step of the transaction, and they add very little friction to the process. But they go a long way in preventing card-not-present fraud and reducing fraudulent transaction numbers.

Card-Not-Present Transaction Phone And Laptop Online And Why Cnp Transactions Matter

How to Accept CNP Transactions

Although card-not-present transactions might sound a little scary, many business models require them in order to be successful. The specific method you need to use to accept card-not-present transactions depends on how you obtain your customers’ credit card details.

At Stax, we offer various ways to securely accept card-not-present transactions.

eCommerce Shopping Carts

If you’re looking for an online gateway for your eCommerce business and accept online payments for online shopping, we’ll build you one of the most trusted payment gateways in the industry – our partner Authorize.net. Card-not-present transactions are required for eCommerce, since the customer is not physically present at a brick and mortar store.

Online Invoices

The Stax Platform helps businesses send invoices and accept online payment options. Users can also set up recurring payments and schedules to automated billing through the platform, getting you paid faster for those online transactions.

Virtual Terminal

A virtual terminal is an application that can turn any device with a web browser into a payment terminal. Simply launch the software and enter the customer’s credit card information. Virtual terminals are a handy tool for taking credit card payments over the phone or inputting payment data sent by customers (for instance, when they fill out a paper form.)
Most modern payment processors (including Stax) provide virtual terminal solutions, so be sure to ask your provider about their offerings.

Payments API

Many businesses find it highly effective and beneficial to create their own payment acceptance application. The Stax API provides your developers with the tools and resources they need in order to create a payment flow that’s perfect for your unique business.

Now more than ever, card-not-present CNP transactions have become a very popular way for customers to make payments. That is why it’s important for you to work with a payment processing company that offers secure and hassle-free ways to accept those card-not-present payments.

Stax offers the greatest level of PCI security to guarantee that sensitive information is held to PCI compliance standards.

To understand how Stax’ payment solutions can support your card-not-present payment needs, contact us for a custom savings quote today. We will be glad to discuss your needs and how Stax’ integrated solutions can help.

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FAQs about CNP Transactions

Q: What is a Card-Not-Present (CNP) transaction?

A Card-Not-Present transaction is a type of payment that occurs when neither the cardholder nor the physical card is present at the time of the transaction. This typically involves payments made over the phone, online, or via fax.

Q: What is the difference between Card-Present and Card-Not-Present transactions?

A Card-Present transaction happens when the payment is made in-person where a magnetic stripe is swiped, the EMV chip is inserted, or a mobile wallet is tapped. In contrast, a Card-Not-Present transaction occurs when the physical card does not interact with a physical terminal, as in the case of online purchases or phone orders.

Q: What are some examples of Card-Not-Present transactions?

Several examples of Card-Not-Present transactions include eCommerce shopping carts, online invoices, automatic billing, phone orders, website payments, mail order purchases, and Card-on-file transactions.

Q: Why are the interchange costs for Card-Not-Present transactions higher?

Interchange costs for Card-Not-Present transactions are generally higher than Card-Present ones because of the increased risk. As the cardholder data is more difficult to verify in Card-Not-Present transactions, there is a higher risk of fraud and chargebacks, which leads to higher processing fees.

Q: How can businesses protect against Card-Not-Present fraud?

Businesses can protect against Card-Not-Present fraud by using a secure payment gateway, capturing important customer information, maintaining PCI Compliance, and using an Address Verification Service (AVS) which verifies the billing address provided by the shopper matches the one associated with the cardholder’s account.

Q: What solutions does Stax offer for accepting Card-Not-Present transactions securely?

Stax offers various ways for businesses to accept Card-Not-Present transactions securely, such as eCommerce Shopping Carts, Online Invoices, Virtual Terminal, and Payments API. Additionally, Stax guarantees the highest level of PCI security, ensuring sensitive information stays safe.

Q: What measures can one take to reduce the cost of Card-Not-Present transactions?

Businesses can reduce the cost of Card-Not-Present transactions by investing in a mobile card reader to swipe cards directly, thereby avoiding the higher interchange fees associated with manually entering card information.

Q: What is the impact of EMV or chip technology on Card-Not-Present transactions?

The widespread adoption of EMV or chip technology has made Card-Present fraud more difficult, causing fraudsters to shift their fraudulent transactions from brick and mortar stores to online, thereby increasing the risk and occurrence of Card-Not-Present fraud.

Q: What role does PCI compliance play in Card-Not-Present transactions?

PCI compliance is crucial in Card-Not-Present transactions as businesses handling credit card information must adhere to the security standards set by the payment industry, irrespective of whether the payment is a card-present or card-not-present transaction.

Q: How has the popularity of Card-Not-Present transactions increased in recent years?

With the advancement and convenience of online shopping and remote transactions, the popularity of Card-Not-Present transactions has grown significantly, making it a common method for customers to make payments. As such, it’s crucial for businesses to provide secure and hassle-free ways to accept these kinds of payments.


 

Everything You Need to Know about Enterprise Payment Processing

Digital technology is transforming the payments industry and creating a highly competitive market. Due to the saturation of the merchant services industry, finding a fintech company that can support enterprise payment processing may seem cumbersome. With more locations and a larger business model to support, innovation, convenience, and faster payment solutions is a must.

That’s why it’s incredibly important to work with the right Enterprise Payment Solutions. In doing so you can simplify complex payment processing and keep your processes running smoothly. It’s also recommended that you utilize a single payments platform. Large businesses have plenty of moving parts, so handing all your payment reduces complexities from your operations.

To help you better understand the ins and outs of enterprise payment processing, we’re put together a guide on what it is and how to make it work in your business.

What Is Enterprise Payment Processing?

An Enterprise is a conceptual organization of people and entities that interact with one another with the intent to accomplish something. Enterprise payment processing focuses on those businesses with multiple locations processing at least $8M in payments a year.

Needless to say, the payment needs of enterprises are much more complex. As a large business, you may need services to support global payments, online payments, wire transfers, ACH — or all of the above.

Managing multiple locations and channels increases complexity in how the enterprise collects payments. The organization requires a streamlined process that allows it to not only use more payment solutions under one umbrella but also account for a greater variety of payment needs. For this reason, enterprises must carefully select their payment vendors and partners.

Also Check Out: Frequently Asked Questions About Payment Processing

Benefits of an Enterprise Payments Strategy

Now that we’ve covered the basics of enterprise payments, let’s look at how you can craft an enterprise payment processing strategy for your organization.

First, an enterprise-wide payment strategy must support your capital strategy. Note that defining an enterprise-wide payment strategy requires a thorough analysis of data. This helps establish a true cost per payment method or payment channel. When working on revisions to an existing working capital strategy be sure to look at more than just an income statement. You should develop and understand the link between your income statement and balance sheet.

Once that’s complete, your next step will be to have a baseline understanding of your current payments ecosystem. Look at your enterprise business’s receivables and payables and complete an inventory of payment options, methods, vendors, volumes, and processes currently in place. By aligning your payments with common performance indicators across all payment types, you can objectively review your payments. This helps identify opportunities to define new strategies that support your working capital.

Things to consider:

  • How long it takes to collect from customers
  • The timeframe from invoicing to payment
  • How long it takes to sell inventory
  • How long the organization is given to pay its bills

Taking these steps will enable you to gain clarity into your needs, so you can select the right merchant services provider and set up processes that are optimized for your organization.

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How to Speed Up Your Enterprise Payment Processing Lifecycle

The fast-paced world of consumers and ever-changing vendor relationships demand that businesses keep an eye on the future. It’s essential to know how customers pay, how you pay your vendors, the barriers they may experience, and how to fix any problems that may currently exist.

The challenge for many enterprise businesses is finding the bandwidth to keep tabs on the fast-moving fintech. Consumer expectations for speed and experience are being set by the tech giants like Apple, Google, and Amazon, and financial institutions have no choice but to adapt. In today’s digital world, a C2C payment can clear in less than a minute. On the enterprise side, the payment life-cycle can have a duration of 60, 90, or even 180 days.

Here are a few useful tips you can use immediately to minimize your payment lifecycle.

  • Adopting new processes. For example, shifting from paper invoices that need to be printed and sent by post to digital invoicing cuts down on processing time and minimizes cost.
  • Using a single system to process payments. Instead of using multiple solutions individually to manage your Enterprise payment lifecycle.
  • Automating processes recurring payment tools, consolidating payment data, automating receivables management/payables management.

Payment Innovation That Works With Your Enterprise Business

Finding solutions that can integrate with each other, streamline processes, and simplify workflows across multiple locations is ideal for enterprise businesses. This can help with speeding the time it takes to process payments for your business.

Stax Enterprise is an all-in-one payment solution that helps to manage every aspect of the Enterprise business’s finances. With optimized payment processing tools such as recurring billing, virtual payment options, access to accounting, and data analytics managing Enterprise payments has never been easier. Multiple processing solutions, business locations, or business tools, give you multiple data points to manage. Stax has all of your data in one view so you can accurately plan for the future.

Find a Partner Who Shares The Same Values

Delivering a great customer experience is imperative to any business, be it big or small. Choosing a merchant services provider that mirrors your values is just as important as what services they offer and the savings they provide.

Knowing what your business needs to succeed helps answer the question of what the right provider looks like for you. With that in mind, you can make an informed decision and choose the right all-in-one payment solutions provider for your enterprise business.

Stax Enterprise is one of the only all-in-one payment solutions dedicated to the success of scaling businesses. With leading technology and dedicated customer support, Stax helps enterprise payment processing businesses stay competitive as they continue to scale.

Designed for your enterprise business, Stax Enterprise brings your entire payment experience into one easy-to-use platform. The payment system is designed in a way that offers maximum capabilities in an intuitive interface.

To learn more about our suite of enterprise payment processing solutions, or to receive a custom savings quote, reach out to us at Stax today.

You Might Also Like: Should You Use a 3rd Party Payment Processor?

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FAQs about Enterprise Payment Processing

Q: What is Enterprise Payment Processing?

Enterprise Payment Processing is a system designed for businesses, especially those with multiple locations and a high volume of transactions, processing at least $8M in payments a year. It simplifies complex payment procedures, supporting a variety of services like global payments, online payments, wire transfers, and ACH.

Q: What are the benefits of an Enterprise Payments Strategy?

An enterprise-wide payment strategy can streamline your processes, reduce complexities, and support your capital strategy. By conducting a thorough analysis of data, you can understand your true cost per payment method or payment channel, align payments with performance indicators, and identify opportunities for new strategies that support your working capital.

Q: How can an Enterprise Payment Processing system speed up the payment lifecycle?

By adopting new processes like shifting from paper to digital invoicing, using a single system to process payments, and automating processes like recurring payment tools and consolidating payment data can significantly minimise your payment lifecycle.

Q: What is the role of Payment Innovation in Enterprise Business?

Payment Innovation is about finding solutions that can integrate with each other, streamline processes, and simplify workflows across multiple locations. This can help speed up the time it takes to process payments for your business.

Q: How to select the right Enterprise Payment Solutions provider?

It’s essential to understand your business needs and find a provider that mirrors your values and offers the services you need. An all-in-one payment solutions provider like Stax can help manage every aspect of your enterprise business’s finances.

Q: What is Stax Enterprise?

Stax Enterprise is an all-in-one payment solution dedicated to the success of scaling businesses. It brings your entire payment experience into one easy-to-use platform, offering optimized payment processing tools like recurring billing, virtual payment options, access to accounting, and data analytics.

Q: How can Stax help in managing Enterprise payments?

Stax helps manage every aspect of the Enterprise business’s finances by providing optimized payment processing tools such as recurring billing, virtual payment options, access to accounting, and data analytics. It consolidates all your data in one view so you can accurately plan for the future.

Q: What are the factors to consider when crafting an enterprise payment processing strategy?

Factors to consider include the timeframe from invoicing to payment, how long it takes to collect from customers, how long it takes to sell inventory, and how long the organization is given to pay its bills. Understanding these factors can help you select the right merchant services provider and set up processes that are optimized for your organization.


 

Fattmerchant is Now Stax: The Payments Technology Company

Same Dedicated Company. A Bold New Look.

As we continue to upgrade our payment technology, products, and services, we are excited to share what comes next with our fresh new look and name: Stax.

After 6 years we’re changing our look to better represent our commitment to empowering businesses to move faster, think smarter, and make better decisions. Not only does Stax represent where we are and what we do today, it acknowledges our spirit and evolution as a company dedicated to meeting the future needs of every business.

This new name mirrors the growth and transformation of Fattmerchant from an innovative payments company to its position today as a leading technology and solutions payment processor provider in the financial space.

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What’s New with Stax by Fattmerchant

A New Logo

  • A new design aligns with our innovative approach and the ability for businesses to build on their suite of products and gain a competitive edge as they grow at scale

Stax Logo On Dark Background

New Website Experience

  • Easier to navigate and more comprehensive information about our product suites and services
  • A simpler, more seamless experience to promote greater transparency and consistency
  • Information is easier to access with rich content in a modern, clean, and organized layout

New Product Experience

  • All-New Mobile Application
  • Fully reenvisioned dashboard experience for ios and android
  • New multiple account selector options and quick user switch for shared devices
  • Added push notifications for daily deposits
  • Know when you are connected to your mobile reader

You Might Also Like: Payment Processing Platform and Data Analytics for 2021

Enhanced Desktop experience

  • Easier access to the features you love with a new quick actions option
  • See business at a glance and filter charts by day, week, month, and year
  • Access more insights with newly added comparison stats for sales and refunds
  • View Transaction Heatmaps on a summary or detailed level

Enhanced Dashboard

  • Inclusive redesign with improved dashboard interfaces
  • Ultra-simple navigation that puts all the power of the Stax platform a tap away
  • Improved user-friendly reporting with insights on sales, deposits, invoices, and recent payments
  • Bolstered analytics view

Related: All You Need to Know About eCommerce Payment Processing

What hasn’t changed with Stax by Fattmerchant

Website Access

  • Continue to find all the information you need and more at fattmerchant.com

Product Experience

  • Log in to your mobile user account the same way you always have from the same place
  • Enjoy all the same great features you have come to know and love plus more
  • Still recognizably simple and easy to use

Leveling Up and Going the Extra Mile

While our name may change, the people and nature of our company you have come to know and love will remain the same. As we continue to roll out more updates and improvements in the coming months, we want to take this opportunity to thank you for your continued support.

We are excited to continue expanding beyond being a merchant services provider as we build the products and services you need to move faster, think smarter, and make better business decisions. We look forward to delivering even greater experiences under our new Stax brand and supporting businesses in more ways than ever before.

Stay in the conversation by following us on Facebook, Twitter, and Instagram and hear the latest in Stax news, products, and more.

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FAQs about Fattmerchant

Q: What is the main reason behind Fattmerchant rebranding to Stax?

Fattmerchant rebranded to Stax to better represent their commitment to empowering businesses and to reflect their position as a leading technology and solutions payment processor provider. The new name embodies their evolution as a company dedicated to addressing the future needs of businesses.

Q: What are some of the changes customers can expect to see with Stax?

Customers can expect a variety of changes with Stax including a new logo and website design, a new mobile application, enhanced desktop and dashboard experiences, and new product features. They aim to offer a more intuitive and user-friendly experience across all platforms.

Q: What is the new Stax mobile app?

The new Stax mobile application allows for easy access to your business’s payment details. It features a fully reimagined dashboard experience, new account selection options, push notifications for daily deposits, and easy connectivity to your mobile reader.

Q: Are there any changes to Stax’s website access or product experience?

While Stax’s website has been redesigned for a better user experience, customers can still access it at the same URL (fattmerchant.com) and the way they log into their mobile user account remains the same. Additionally, all the features and functionalities customers have come to appreciate remain available, with additional enhancements.

Q: What makes Stax’s payment processing different from others?

Stax, formerly known as Fattmerchant, is recognized for its subscription-based pricing and no markup on interchange. It empowers businesses by enabling them to understand exactly what they are paying each month.

Q: What remains the same after Fattmerchant’s change to Stax?

Despite the rebranding to Stax, the company’s personnel and the nature of the company remain the same. Customers can continue to expect the same level of quality and service they have become accustomed to.

Q: What are the future plans for Stax?

Stax plans to continue evolving beyond being just a merchant services provider. They aim to expand their product and service offerings to help businesses make better decisions, run their operations more efficiently, and position themselves at the forefront of their respective industries.

Q: What are some of the new capabilities in the enhanced Stax’s Dashboard?

The improved Stax Dashboard design provides users with an ultra-simple navigation system, user-friendly reporting with insights on sales, deposits, invoices, and recent payments, and a bolstered analytics view. This ensures that all the platform’s power can be easily accessed.

Q: How has the Stax desktop experience been enhanced?

The enhanced desktop experience from Stax allows easier access to the features users love most with a new quick actions option. Users can now view their business at a glance, filter charts by day, week, month, and year, and access more insights with newly added comparison stats for sales and refunds. They can also view Transaction Heatmaps on a summary or detailed level.

Q: What is the vision of the new Stax brand?

The vision of the new Stax brand is to empower businesses to move faster, think smarter, and make better decisions. With improvements and updates to their product offerings and services, they aim to support businesses in more ways than ever before.


 

APIs and ISV Partnerships

How To Tap Into The Potential Of APIs and ISV Partnerships and Integrations

Last year when the Pandemic exposed vulnerabilities in business models, it showed how unprepared, fragile and rigid business models were in the face of crisis. But organizations that quickly recalibrated their strategic plans using the principles of composability were more prepared to withstand the pandemic due to its modular design’s agility.

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As an Independent Software Vendor(ISV) Stax works with a number of software partners to give sub-merchants total control over how they operate their businesses. In our last blog, we took a deep dive into the benefits of ISV partnerships and integrated payment partner programs.  But how do APIs and ISV Partnerships work? Here we’ll take a deep dive and examine what an API is and how the Stax API provides additional value to your customers.

What is an API?

An API allows a developer to integrate one technology’s functions and features into their own technology. That means with the Stax API, your business can integrate Stax payment processing for ISV and data into an existing application or system.

For instance, if your company has a customer-facing app, you can use the Stax API to securely accept payments from inside your app as well as view analytics.

Stax Payment Processing API also supports the ability for ISV sub-merchants to accept both card-present and card-not-present transactions right from their platform. This saves these businesses time and money since they would no longer have the need to use other third-party payment providers.

Through Stax Connect, the API enables the software business the ability to offer their users a more complete, all-in-one solution. As a result, ISVs are easily able to extend the capabilities of their platform without the need to waste valuable time and resources on development.

Gartner predicts that, through 2022, 60% of organizations will prioritize transitioning to a composable enterprise model. 

There is a critical need for businesses to move towards the adoption of composable architectures and software components developed around a specific business vertical to allow an organization to build models of larger software suites connected via API. 

What’s the Value of an API?

Stax API adds value to existing technology, easily extending your platform’s capabilities and functionality. Businesses and software providers can quickly add a full suite of tools at their disposal.

Business users and providers are able to view data analytics from a single dashboard and manage their customer’s information. You can also manage one-time or recurring payments and create professional customizable invoices. If your customers pay online, you can build hosted payment pages. Your customers will get an all-in-one experience that they can’t get anywhere else. Stax Payment Processing API tokenizes payment information, so you can be confident your data remains secure.

And it goes even further as the API can integrate with other solutions. Software Vendors are able to provide customers with a unique, customizable payments experience from end to end on their platform.

How the Stax API Fits In with Independent Software Vendors (ISVs)

Stax API is backed by thorough documentation and a seasoned team of developers. Stax offers developer-friendly SDKs, and the RESTful API works both online and on Android and iOS devices. We also offer a full Javascript library.

The in-house development team also works alongside each ISV to develop and integrate the right technology to fit exactly what’s needed for their users. With support from an experienced team of integration experts, Stax Connect’s API opens up the ability to have custom experiences through payment integrations that are tailor-made for your platform.

Stax Connect also supports custom application fees to generate revenue for your business. Since Stax is a certified payment facilitator, you can instantly onboard customers and bypass lengthy approval processes. The application process only takes 4 minutes, with a 24-hour approval time. Ultimately, Stax Connect will give you the resources you need to succeed and create an immersive experience for your users and their customers.

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FAQs about API

Q: What is an API, and how does it work in ISV Partnerships?

An API (Application Programming Interface) allows a developer to integrate one technology’s functions and features into their own technology. In the context of ISV (Independent Software Vendor) partnerships, an API such as the Stax API allows businesses to integrate Stax payment processing and data into an existing application or system.

Q: How does the Stax API provide additional value to customers?

Stax API adds value by extending a platform’s capabilities and functionalities. For example, business users can view data analytics from a single dashboard, manage customer information, schedule recurring payments, and create customizable invoices.

Q: What role does the Stax API play in the context of Independent Software Vendors (ISVs)?

The Stax API, supplemented by thorough documentation and a seasoned team of developers, enables ISVs to develop and integrate the right technology for their users. This could range from payment integrations to custom application experiences.

Q: How do APIs contribute to the success and sustainability of business models?

APIs contribute to the success and sustainability of business models by enhancing their flexibility and interoperability. Particularly in the face of crises, organizations that use APIs to create composable business models are better prepared to withstand disruptions due to the agility of modular designs.

Q: What are the benefits of API integration for a user-facing app?

Companies with user-facing apps can use APIs to securely accept payments from within their app, view analytics, manage customer information, and handle both card-present and card-not-present transactions. This not only enhances the user experience but also saves businesses time and money as they no longer need to rely on third-party payment providers.

Q: How does Stax support ISVs in integrating their API?

Stax offers developer-friendly SDKs, and the RESTful API works both online and on Android and iOS devices. The in-house development team works alongside each ISV to develop and integrate the right technology to fit exactly what’s needed for their users.

Q: Why are industry experts predicting a rise in the adoption of composable architectures?

Industry experts anticipate a rise in composable architectures because they allow organizations to build large software suites connected via APIs and focused on specific business verticals. This approach provides businesses with the agility and resilience needed to adapt to rapidly changing market conditions and technological advancements.

Q: How can APIs assure data security during transactions?

APIs like Stax Payment Processing API tokenize payment information, ensuring that data remains secure during transactions.

Q: What unique experiences does Stax Connect offer through API integration?

Stax Connect’s API opens up the ability to have custom experiences through payment integrations tailor-made for your platform. It supports custom application fees, faster customer onboarding, and provides the resources needed to create an immersive experience for the users and their customers.

Q: What does it mean when a company like Stax is a certified payment facilitator?

Being a certified payment facilitator means that Stax can bypass lengthy approval processes, enabling quick and efficient customer onboarding.


Ready to take the next step with Stax? Contact us to learn more about Stax Connect and the software benefits of using integrated payment technology.

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How to Successfully Scale Your Business

Scale: “To grow or expand in a proportional and usually profitable way”

If you are a business owner interested in expanding it’s always important to keep in mind how you can scale your business. Even if your business is still growing or currently unprofitable, there’s still a chance for exponential potential. Businesses that are able to successfully scale have a few things in common that contribute to their success. If you can add significantly more customers without increasing your costs proportionally, then the business is “scalable” and becomes more and more profitable as it grows.

So how is it that some businesses are able to scale and others aren’t? Here are a few things to consider when determining how to successfully scale your business.

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How Do You Know if Your Business Is Scalable?

“You have to have customers. You have to have revenue. You have to have a data point that shows why if you take one dollar you are going to return ten dollars.” – Suneera Madhani CEO/ Founder Stax

There are multiple factors to consider to determine whether or not your business model has the potential to scale. Successful business growth depends on a scalable business model that will increase profits over time, by growing revenue and avoiding cost increases. Most businesses fall into one of three categories: brick-and-mortar businesses, online businesses, and service providers. Expenses required to properly scale depend on your business type.

Related Content: The Holistic Guide to Scaling your Business

According to the U.S. Small Business Administration, most microbusinesses cost around $3,000 to start, while most home-based franchises cost $2,000 to $5,000. So how do you estimate your hard costs to scale your business? Here is a generalized list of common expenses you’ll accrue in order to scale pending on your business type. Make sure to add any other additional expenses that are unique to your business. If financing is an issue, finding investors to fill in the gaps is a solid solution.

  • Office space
  • Equipment and supplies
  • Communications
  • Utilities
  • Licenses and permits
  • Insurance
  • Inventory
  • Employee salaries
  • Advertising and marketing
  • Market research
  • Printed marketing materials
  • Website Updates and Optimizations

Take Stock of Your Business

As your company continues to grow, take stock of where your business is now and its potential to scale. This is vital for exponential growth. So where do you start? Data. The more data you have, the better equipped you are to make changes when necessary. This gives you the opportunity to either fix what’s broken or improve what’s working.

You can’t manage what you can’t measure. In other words, you can’t know what to do differently unless you analyze where your business stands today. Is your business surpassing previous goals? A strong cash flow due to consistent sales with proven concepts and reliable infrastructure alongside minimal risk is a good sign that your business is ready to scale.

Solidify Your Sales Structure

Having a sales structure in place to generate more revenue is essential to support your growth. A sufficient number of leads include the implementation of marketing systems to track and manage leads. A robust system to manage sales orders, and enough sales representatives to follow up and close leads is also necessary for success. A billing system with a receivables function to follow up will ensure that invoices are collected in a timely manner.

By now you should be able to identify your ideal customer. Understanding the needs of your ideal customer, select a repeatable, profitable, and scalable way to sell to them. This will allow you to design an optimal sales funnel.

Find and Implement the Right Tech

Once you’ve pulled together the right data, pinpoint areas you can reduce risk, and solidified your sales structure it’s time to assess your tech. Carrying out necessary technology upgrades and using the right tools is an essential part of successfully scaling your business. Certain products and tools such as a website upgrade, customer management system, new landing pages, etc is a solid first step to business growth.

It is possible you might be ahead of the curve and have an individual or team in-house who can immediately address important upgrades. For example, a web developer who can immediately address your website upgrades. If not, it might be a smarter decision to invest in services from an external team. Other companies have dedicated time, experience, and expertise that your team members might not have for certain tasks. This can also help with speeding up the process, as well as freeing up the time for your team to focus on more immediate needs.

Hire the Right People

Having a solid team behind you is an important part of helping your business scale and grow successfully. Look at industry best practices for the overall functionality of your business and determine how many customers one service rep can handle. Don’t assume that more salespeople hired will equate more sales made. You want to find employees that will fit in with your company’s culture.

Don’t forget management. As your business scales, you will find you are no longer able to personally oversee every aspect of the business. Having the ability to confidently delegate responsibilities to different department leads will allow you to focus on big picture items that will help move the needle and support business growth. As your business grows, the management bench grows as well.

How Stax Payment Processing Can Help You Scale Your Business

More payments mean more revenue. The real differentiator to be considered as you begin to strategically scale your business is how you can make payments processing part of your revenue strategy. The way your business processes payments will help fuel revenue growth.

Stax’ leading technology, award-winning customer support, and money-saving subscription model work hand in hand with the needs of your business today to ensure you get paid faster.

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