Many of you have probably heard about online payment processing and to you, it might seem like a simple process of acceptance of online payments, but to be honest, it is a relatively compound and complex process. Many people are not aware of what goes on behind the curtain when you are performing a payment. And also, many business owners have no idea what is actually happening when they accept payment. In this text, we are going to cover the topic of online payment processing in order to bring closer some terms and actions that you might not be aware of but should know, if only because it may help you to deal with certain problems that might arise in this area.
What is online payment processing?
If you were thinking of accepting online payments, firstly you will need to get familiar with three key pieces of software. When we talk about these three main components, we want to mention the significance of their correlation. When one of the components is missing the entire system will stop working. In the text below we will explain them and give a little bit more information about the main elements of online payment processing.
1. Payment processor
The payment processor is in charge of transmitting information from the customer’s credit or debit card to the customer’s bank and the bank of the seller. The payment processor basically manages card transactions and deals with certain issues such as card limits, the validity, and security of the credit cards and etc. In order to better understand the role of a payment processor, you can think of them as being a middleman or a mediator between the bank and the merchant. If the customer has enough amount of funds on the credit or debit card, the transaction will go through and it will be approved.
2. Payment gateway
Payment gateway is the most important component when it comes to online shopping. It helps in connecting the website and the payment processor. Also, they can be used in connecting the merchant account with credit or debit card issues. To be precise, the payment gateway is there to manage and handle the technical side of payment processing and to make sure that you will receive customer’s payments.
3. Merchant account
A merchant account is a unique form of a bank account. It enables your business to be able to have online shopping and accept online payments. If you don’t have a merchant account, the customer’s money wouldn’t have a place to go. So it’s one of the key components of managing online payment processing.
In this text, you had a chance to learn more about the functionality of online payment processing and all the necessary elements in order for it to work flawlessly. When you are choosing a payment processor for your own business, you need to make sure you are a good fit.