The complete guide to payment processing in 2021
For many companies, payment processing comes down to opening a merchant account and then sending the information received from customers to the processor. Then other participants perform all the actions, and the money ends up in the company’s account. What else needed? However, it is a complex and more complicated process.
The company needs to choose the processor and evaluate the conditions of the service, understand what payment method is better to choose and whether they will be enough for the clients to choose this particular company. It is also necessary to assess the compatibility of the equipment and all the programs. There are a lot of questions to be solved. In this article, we will look at some of them.
Complicated payment processing
At the very beginning, your company needs to do everything to make the customer want to fill out an order form on the site. You should have high-quality products that meet clients’ needs, and you should make the ordering process as simple as possible.
A complicated checkout page is one of the cart abandonment reasons.
Once the customer filled out the payment details, this data is sent to the processor via the payment gateway. Of course, the payment gateway encrypts the information for security purposes. The payment processor sends a request to the issuing bank. If there are enough funds for the payment, the transaction is confirmed. The processor will inform you that the transaction was successful, and a request will be sent to your bank account.
Since the payment processing industry is well-balanced, all parties get their transactions processed almost instantly.
A pleasant outcome for the company will be crediting the money for the purchase to its account.
How to process payments?
Offering various payment options is vital for the conversion rate.
- The easiest way to pay for goods involves using a debit card. In this case, if there is enough money to pay, the transaction is completed, and the bank does not need to waste time and perform unnecessary actions to provide the client with a loan. Why do we focus on credit? Because every loan is a risk for the bank. Therefore, the risks are lower without it, and your company will pay a lower processing fee.
- The second way involves using a credit card. To make this method available, the company needs to think through all the points, choose a company that will provide all the equipment and software for credit card payments, and chooses a processor with a more loyal commission.
- The third way to process payments is ACH. It involves organizations such as ODFIs and RDFIs. First, the customer is authorized, then initiates a transaction, the amount is sent to the bank, the account is verified. All this is done quickly and without the involvement of the client.
- The fourth and one of the most widespread ways for accepting payments in 2021 are electronic wallets. Users can use it easily, fast, and with any device. The client does not even have to contact the terminal, which is essential, given the current epidemiological situation in the world. Payment with digital and electronic wallets became possible thanks to advanced technologies such as MTS, NFC, etc.
Transaction processing can be entrusted to payment gateways, paying a fee every month or yearly, depending on company policy. These gateways will provide high security by encrypting information received from customers.
The bottom line
Take your time choosing a gateway because the profitability of cooperation with each company will depend on many factors, particularly on the number of transactions, their volume, and provision of additional services.
However, we can say for sure that we don’t recommend you ignore alternative payment methods and limit your clients. After all, the diversity of payment methods is critical if merchants want to cover all potential customers.