This will probably come as no surprise, but those glitzy advertisements claiming that you can run your online business in just minutes per day from your chaise longue on the beach are misleading, to say the least. In order to succeed, you need more than a good idea, some sought-after products, and a functioning website. For one thing, you’ll need the right ecommerce payment processing solution. 

Online payment methods.

The first step toward gaining an understanding of your particular ecommerce landscape involves comprehending the different ways your customers will give you their money in exchange for your products or services. Most commonly, buyers pay online by entering their credit card number, expiration date, and security code into your secure checkout form. This information is then transmitted via your gateway software to the other participants in the payment process where the transaction is validated, completed, and conveyed back to you via the same channels.

Although credit cards are used more than any other payment method, there are, of course, other ways for customers to shop. For instance, they can provide you with their bank account and routing numbers so that funds can be directly debited. When they use this form of payment, you can also give them the option of making recurring payments. This popular way to purchase is particularly useful for subscription services or when obtaining big-ticket items financed over months or even years.

Another category of solutions involves alternative payment methods. These include digital wallet services like PayPal, Apple Pay, Amazon Pay, and Google Pay. Customers must first sign up with these third-party services, providing them with their credit card information. At the time of purchase, buyers then simply press the appropriate option on your ecommerce site to be taken to their wallet account for authentication.

Components of ecommerce payment processing.

Securely conveying funds digitally between buyer and seller involves several entities. 

  • Payment gateway. This intermediary stands between your website and your customer. Although the buyer may not realize it exists, the gateway is the technology that acts as the courier for the customer’s payment information, securely conveying it to the payment processing company.
  • Payment processor. This entity receives the payment information from the gateway, authenticates the identity of the customer, verifies that sufficient funds exist in the account, and deposits the funds into your merchant account (provided the payment is accepted.)
  • Merchant account. This is the repository that holds your funds once they have been sent by the payment processing company. You can choose between a dedicated account that is used only by you or an aggregated one that often comes bundled with your payment gateway. Upon receipt of funds from a purchase, you can then transfer the money into your business account.

Once all of the elements of your payment platform are in place, they can function seamlessly together. The process works as follows:

  • Your customer selects the items they want to buy, adding them to their shopping cart.
  • During checkout, they securely enter their credit or debit card information. 
  • The gateway secures the payment details and sends them on to the payment processor.
  • The payment processor contacts the customer’s credit card company to ensure that there are sufficient funds in the account.
  • The customer’s credit card issuing bank either rejects or accepts the payment.
  • The processing company sends the results (payment accepted or denied) back through the gateway to notify the customer on your website.
  • If the payment is accepted, funds are deducted from the customer’s account and issued to your account or bank.

Amazingly, this entire process usually occurs in a matter of seconds.

More about payment gateways.

As you determine the ecommerce solutions that are best for your business, you must understand the various types of payment gateway options that are available to you. Think of the gateway as the online equivalent of the card reader and point of sale systems used in brick-and-mortar retail stores. Your gateway is connected to your ecommerce website via a plugin extension. In most cases, you can buy a premade integration that enables your site to communicate with the gateway. Once it is up and running, you can offer services to your customers such as flexible payment options, secure tokenization, and storage of payment data to make future purchases easier and even capture charges that can be authorized at a later date.

Additional security precautions for your ecommerce site.

When it comes to exchanging funds for goods and services online, there is nothing more important than securing your customers’ trust. After all, the internet can be a dangerous place. The headlines are brimming with horror stories about devastating data breaches that happen as a result of poor digital security hygiene. When buyers’ doubts about the safety of the payment data they submit are assuaged, they are much more likely to complete a purchase.

One of the most compelling pieces of proof that you can provide to your customers is a secure sockets layer (SSL) certificate. This digital certificate authenticates the identity of your website and scrambles the customer payment data being sent to your server so that it cannot be hijacked by hackers. In addition to reducing the chances of data being intercepted by criminals, the presence of the “green lock” SSL certificate demonstrates your commitment to security to potential buyers, thereby increasing the likelihood of sales conversions.

Another important consideration that you must keep in mind is PCI compliance. Any site that stores, manages, or transmits customer credit card information is subject to the Payment Card Industry Data Security Standard (PCI DSS). This set of guidelines provides businesses of all sizes with requirements they must adhere to in order to accept credit card payments. If you accept customer payments directly on your ecommerce site, PCI compliance is your responsibility. On the other hand, you are not directly responsible for compliance if customers are redirected to a third-party vendor such as PayPal during the payments process.

Factors in choosing the proper payment processor.

Fortunately, you are not in a vacuum when it comes to setting up your ecommerce site. Your chances of success are magnified exponentially with the right payment processing company at your side. When choosing among your many options, ask the following questions:

  • Do I already have a merchant account, or do I need one?
  • What types of payments do I want to accept (credit cards, direct debit, cryptocurrency, etc)?
  • What PCI compliance issues exist?
  • Is there an integration plugin available for my ecommerce platform?
  • What features does the payment gateway offer?
  • Does the payment gateway offer certified, point-to-point encryption, and tokenization?
  • The better you understand your customers, your business, and its current and future needs, the more intelligent you will be in your choice of the payment processor best for your business.

Whether you are launching a new company or expanding your already existing brick-and-mortar presence, there is no doubt that accepting online purchases is an excellent path forward for your company. Understanding the virtual payments landscape is essential as you launch this next phase of your sales success. Attention to these crucial factors now can lead to optimal security, success, and customer satisfaction later.

Contact NAB today and see how easy it is to get the merchant services you deserve.


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