Merchants who aspire to sell online must be able to understand the e-commerce basics to equip them with the right knowledge that will serve as a guide in setting up the online business.
E-commerce refers to the purchase and sale of goods and services using the internet including the transfer of money and data to be able to undertake the transaction.
There are 5 core items that an e-commerce professional must look for to be able to start selling online.
1. Domain registration
Domain registration is the process of registering a domain name or a web address (i.e. ipaytotal.com), which is the address that is typed in the website browser address bar to reach a website.
A domain name can be purchased through the following channels.
- Domain Name Registrars – are companies that provide domain registration service to individuals or companies that would like to own a particular domain name or web address.
- Website Builders – are companies like Wix, Squarespace, and Weebly that allows anyone (be it a beginner or an experienced designer) to create a website using drag-and-drop tool editor and offers free custom domain name for the first year of subscription.
2. Quality e-commerce website developer or platform
E-commerce platforms serve as the backbone of any online retail business that allows the creation of customized online store, management of the website, sales, and operations.
3. Quality Web Hosting Solution Provider
Web hosting is a service that allows a company or an individual to post a website or a webpage and also provides the necessary technologies needed for the website or webpage to be viewed on the Internet.
Price should not be the sole consideration in getting a web host. Other factors must also be considered such as Speed, Support, Security and even Scalability.
4. Shopping cart
This is part of the e-commerce software that is plugged-in the website that allows visitors to the physical shopping cart.
5. Way to accept payments
This is the combination of having Payment Processor, Payment Gateway & Merchant Account.
The most important aspect of e-commerce especially for online merchants is how the online merchants will accept payments from customers. It may sound very simple but there are three factors that affect accepting of payments from customers to merchants and these are:
A payment gateway refers to the technology that allows stores to read payment cards and sends the customer information to the merchant’s acquiring bank subjected for processing. This has an important role in online credit card processing because it allows the merchant to charge a customer’s credit or debit card for the purchase made by the customer.
The payment gateway technology varies for online merchants and in-store businesses. For brick and mortar retail stores, the point of sales terminals such as card terminals or card readers serves as the payment gateway. Online stores have software and servers that serve as a mediator for all transactions that take place between the website and the payment processor.
It is very necessary for online businesses to secure a payment gateway service that can assist them in accepting credit or debit card payments.
Some of the benefits of having a payment gateway are:
- Secure Processing – Payment gateway comply with PCI-DDS (Payment Card Industry Data Security Standard) and are required to keep the data of the customers secure and prevent the said date from getting compromised All the financial information transmitted online is secured and encrypted via an SSL (secure sockets layer) ensuring that the customers can buy with the online store without worrying that their card information will be stolen or hacked by criminals.
- Easy E-commerce Integration – Payment gateways also provide integration with other plug-ins that are necessary for the online store that can help in speeding the checkout process such as automatic pull up of payment and shipping information of the customer that is stored in the website that will eventually lead to an increase in conversion rate from buying customers to buying ones.
- 24/7 Availability – It helps enables the online store to accept payments at any time of the day.
- Multiple payment options – Payment gateway doesn’t just provide credit card processing for small business but also allows the merchant to accept other modes of payment such as gift vouchers or PayPal payments for PayPal.
- Multiple currency options – Since we now live and work in a global market, domestic and international payment acceptance can help the business achieve growth by being able to sell overseas.
- Report Generation – Real-time report generation can be provided by payment gateways that are helpful and gives insights to merchants as to the state of their business.
There are fees associated with payment gateway service and these must be carefully looked into when choosing for the best payment gateway service provider for the credit card processing system.
- Set-up Fee – $0 to $250
- Monthly Fee – $10 to $50
- Transaction Fee – $0.00 to $0.25
- Transaction Rate – 1% to 5% (It must be double checked with the merchant account provider as this may be charged in the merchant account instead of the payment gateway)
A discounted rate can be offered for merchants with a large number of transactions.
These are financial institutions that function in the background while providing all the payment processing services to online sellers. Payment processors are able to provide the said services by having partnerships with other firms that deal directly with sellers or customers. The primary role of the payment processor is linking both the payment gateway & merchant account and securely passing the necessary information to facilitate the transaction. Choosing the payment processor must be not be taken lightly and must be decided carefully because it can possibly affect the following elements indirectly.
- Business Owner
- Payment gateway
- Credit/Debit card company of the customer
- Bank of the business
Picking the best payment processor is essential for a business because it improves customer confidence, helps avoid lost sales and can help the merchant save money.
A merchant account which is also commonly called as MID or merchant ID is a type of business bank account that allows the online credit card processing as well as debit card processing for merchants. This is required to be able to use a payment gateway to process purchase transaction from the merchant’s website. There are many payment processing and payment gateway companies that offer to provide merchant accounts. Some large banks also provide a merchant account. It is vital to choose the right company that will provide the merchant account to ensure a profitable online business for a merchant.
Once a merchant account is acquired a business can begin accepting payments thru online, card machine and even phone payments.
Explaining the detail of the payment process can help in understanding how the Payment Processor, Payment Gateway & Merchant Account facilitate online credit card processing.
- A customer who will purchase an item in the e-commerce site needs to enter the necessary credit card information and press the buy button to begin the transaction.
- Once the customer hits the buy button, his transaction details including the personal and credit card information will be sent to the payment gateway. The payment gateway will serve as the middleman between the customer’s information and the bank. The transaction details will be passed from the payment gateway to the payment processor together with the merchant ID’s number while also passing along the transaction details to the merchant account.
- Other than sending the transaction details to the merchant account, the payment processor will also contact the issuing bank of the credit card used by the customer to quickly check if the customer hasn’t used up all the credit card limit and to check its legitimacy.
- The payment processor will be notified if the payment is accosted or denied and send the results back to the payment gateway. If the transaction is approved, the merchant’s website can complete the transaction.
- Once the transaction is approved, the ordered item will be scheduled for shipping.
- The credit card issuer of the customer will release the fund (customer’s payment) to the merchant’s bank. The merchant’s bank will transfer the money to the merchant’s account after a short settlement period.
To Know more about Payment Processor, Payment Gateway & Merchant Account, speak with a live representative directly at +44 800 776 5988 or get in touch with us through our website.