E-commerce allows customers to purchase at their convenience, 24/7 from their home computer, smartphone or tablet. It saves time for both the customer and the business, like the old saying goes “time is money”. For the customer it alleviates the annoying standing and waiting in line. For the business with less time spent per transaction, more transactions can be achieved on the same day.
E-commerce is an industry that is growing quickly. Total sales are expected to reach $4.5 trillion a year globally by 2021, up from $1.4 trillion in 2014. This shows 246% growth in just seven years. The growth is just one perk. Aside from that, it is cheaper for the company to put an advertisement online than it is to but up a billboard or making a commercial. And by putting advertisements online more people will see them. For a small business to open its website to an internet full of potential customers, you must be ready to accept online payment for your services.
Online payment refers to money that is exchanged electronically. There are several different payment methods for E-commerce, they are cash, check, credit, debit, money order, gift cards and even digital currency. No one type of payment method is the best, you must decide which ones work for both you and your customers. When deciding on a payment method things you should consider are customer preference, risk, privacy, security fees and transaction costs that is for both you and your customer.
From a business aspect you should consider if you need quick access to business funds to keep your business moving forward, the costs involved with each payment method, ways to follow up with customers for payment, and if there is a delay between purchasing and distributing your product and receiving payment. To accept an online payment the business needs to have access to an Online Payment Gateway. The online payment gateway is a service provider that is integrated with the credit card and transfers the online payment information between the business and the payment processor.
The website 10 Excellent Online Payment Systems explains things that you need to know about online payment systems:
- ACH payments are electronic credit and debit transfers, allowing customers to make payments from their bank accounts for utilities, mortgage loans, and other types of bills. ACH stands for Automated Clearing House and most payment processors offer ACH payment options to their customers, especially for monthly- and subscription-based transactions. Most payment solutions use ACH to send money (minus fees) to their customers.
- A merchant account is a bank account that allows a customer to receive payments through credit or debit cards. Merchant providers are required to obey regulations established by card associations. Many processors (such as the ones listed below) act as both the merchant account as well as the payment gateway.
- A payment gateway allows merchants to securely pass credit card information between the customer and the merchant and also between merchant and the payment processor. The payment gateway is the middleman between the merchant and their sponsoring bank.
- A payment processor is the company that a merchant uses to handle credit card transactions. Payment processors implement anti-fraud measures to ensure that both the front-facing customer and the merchant are protected.
- PCI compliance is when a merchant or payment gateway sets their payment environment up in a way that meets the Payment Card Industry Data Security Standard (PCI DSS). The PCI DSS standard was created by the Payment Card Industry Security Standards Council to increase security of cardholder data and to reduce fraud.
Using a Payment Gateway, provided by a Payment Service Provider (PSP) offers an alternative for businesses whose card-based-turnover is too low or don’t meet the criteria for an Internet Merchant Account (IMA). AT Integrated e-commerce platform does all of the technical aspects of accepting online payments for you. It can also accept online payments using a combination of online payment processors at the same time. This is why it is important to take all things into consideration and do your research on online payment methods before you choose the one you want to use for your website.