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  • How Online Payment Processing Works

    How Online Payment Processing Works

    When a customer buys something from the retail store,How online payment processing works 3 the payment process is straightforward. The customer chooses one or more products from the store, goes to the cashier, receives the charge on the spot and pays in cash or with the credit card. However, the typical online payment process is different. First of all, there are more steps involved, which makes the entire process seem more complicated, but understanding how online payment processing works is not that much of a challenge. If you own an online business or you plan to open an online store, the following article can help you understand how online credit card payment processing solutions will benefit you and your business.

    The Pages Your Customers See

    The visitors’ front end should allow them to choose and check what they are buying, instigate the payment and enter the necessary information such as credit card and personal details to complete the process. It is essential to create an online platform with an intuitive design to ensure your customers will reach the payment stage without any difficulties. Selling products online also involves showing customers the availability of each product, calculating the shipping rates and taxes, not to mention letting them select products via a shopping cart. After selecting what they want, customers will be informed how much their products are worth and will be required to fill in their personal and credit card information to instigate payment. When customers hit the Submit button, their job is finished and a series of backend processes start.

    The Payment Getaway

    How online payment processing works 2The first backend process that kicks off after customers submit their payment is the Payment Gateway. This fraud prevention step verifies whether the card and the charge are valid or not. Starting with the credit card number, every bit of information submitted is checked to ensure their validity including the address, name and the CSV code on the back of the credit card. This step is essential in preventing fraud and all online payment solutions provide it. If the card is not validated, the Payment Gateway will notify you and the payment process is stopped. The process continues only after the credit card passes the validation step.

    The Merchant Account

    After validating the credit card, the Payment Gateway accepts the charge and sends the money from the credit card company to your Merchant Account, which is a special bank account created with this purpose. Businesses cannot accept credit card payments without a Merchant Account, so opening one is mandatory, if you wish to take credit and debit card payments through your online platform. Keep in mind that your bank account for accepting card payments by phone might not work for online payments.

    The Reporting Phase

    Virtual terminals are generally equipped with reporting tools that notify customers that their payment was successfully processed. Everything happens in real time, so the customer is shown a confirmation screen seconds after submitting the payment. Normally, a receipt is also automatically sent via e-mail at this point.

    Getting the Payment Data

    The next step is syncing data. Generally, the reporting tools that show payment information and the application used by storeowners to track constituent data are different and require data synchronizing. There are ways to synchronize the two data sources automatically, but you can also manually export a file from the payment processing application and upload it in your database.

    Receiving the Money

    With the money safe and secure into your Merchant Account, the only thing you need to do is transfer them to another bank account. If you use the Merchant Account of a vendor, you will receive the payment directly from the vendor at the established dates, typically once or twice a month. The Merchant Account has only one purpose, to receive payments, so the money is not accessible to you despite being in your name.

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