The most important decision that you will make to set up an eCommerce website for your business is to choose the right payment processor. It is a very tricky decision, where you will have to make sure its suits your business needs and demands and takes on the path of success.
So while choosing the best payment processing for small business, you will have to take note of the three PS. They are the Players, Pricing, and Procedures.
Who is Involved in Online Payment Transaction?
Three players are categorized as the main lead when it comes to the transactions and processing of debit and credit cards. On one side, it is you, the business owner, and on the other side, it is your customer. The between players are the varied technology solutions that aid in connecting both the party, which you and the customer.
- You, the business owner and the merchant – You will have to partner with an acquirer or a merchant bank to accept the payments done through credit and debit cards. The payments will be accepted on your behalf and will be deposited into the merchant account, they provide.
- Your Customer – The customer must have a credit or debit card to complete the payment transactions. The issuing bank is the one that approves the customer’s card and lends the cash so that the payment is completed.
- The Technology – The technology stands in the middle between you and your customer. They are divided into two states where the first one is the payment gateway and the next one is the payment processor.
The payment gateway software links the shopping cart of the site to the card processing network. The next one, payment processor that does all the jobs like moving transactions through a processed network, sending bill statements, dealing with your banks, and more.
How Payment Transactions Are Processed
As a business owner, you must know how your customer’s money moves to you. The payment processing comes in two stages. They are the authorization and the settlement. The authorization stage is where the sale is approved and the settlement is when you get the money to your account.
The transactions occur through the following process.
- Your customer purchases on your site using a debit or credit card.
- The information is then passed on to the payment gateway. The data is then encrypted so that it is kept safe and private before it sends to the payment processor.
- The payment processor then sends a request to the issuing bank of the customer asking for money to pay for your purchase.
- The issue then responds accordingly with a yes or no.
- If the issuer approves, then the payment processor accepts and completes the transaction. The merchant banks then credit the account.
All this process is done in a span of 2-3 seconds. The second part settlement process where you get paid.
- The merchant bank receives the fund through the card issuer, where the money is deposited into your account.
- The funds are ready and available. The bank sometimes gives you access to the money before it is sent to them. They keep a part of the money in your account that you are not allowed to touch, so that if things are returned from the customers.
Now all these transactions are not done free of cost, for you will have to pay the issuing bank, the merchant bank, credit card associations, and the payment providers. Every time there is a transaction, you pay a small amount fee.
- Interchange – The issuer gets a percentage for each sale. The fee depends on varied factors like sale amount, industry, etc.
- Assessment – The Credit card association like MasterCard, Visa, etc. charges a pre-negotiated percentage fee known as the assessment.
- Markup – The merchant bank charges a markup fee by taking a percentage cut. This fee also varies by industry, monthly sale, etc.
- Processing – A fixed rate is charged by the payment processor, every time there is a transaction.
If you are looking for online payment service providers, then note that you must look for the one that suits your business. One such reliable and affordable firm that guarantees great service is Merchant Service Broker Solutions, a leading company in the world market. So trust them for a better and profitable tomorrow. Call 888-912-6727 for more details!
