For those who are setting up their online stores, choosing the payment processor of your choice with your eCommerce software could be quite a task. Here are a few helpful tips worth taking note of.
Selling Locally or Globally?
The first thing you need to decide when it comes to choosing payment processor is whether you would like to sell your products locally or globally. If you’re planning to sell locally targeting specific country, then it would be wise to check out what are the popular payment gateways being used in the local scene. However, most merchants would like to reach a wider customer base hence they prefer to sell globally. This will very much depend on the type of product that your store is selling as certain products could only be shipped locally as sending them overseas may incur export tax or import duties for the buyers.
Needs To Be Secure
Make sure you do your research to pick payment gateways that are certified secure by international standards. No one wants to compromise on security especially when it comes to transactions that involves money and payment details. If you’re choosing a shopping cart that has limited payment gateway options for you to select, you may want to check with the service provider on whether they are able to integrate the payment gateway of your choice to their solution. This may cost a bit depending on the amount of work that is required which the shopping cart provider will inform your end.
Easy To Use and Fast
Another thing to take note of would be how easy it is to use the payment gateway. Does it require buyers to have a merchant account with the payment provider? Or buyers could just make a purchase using their credit card without the need to create an account with the payment provider. While your shopping cart may require buyers to have an account with your end for the purpose of gathering your customers’ information for further communication and marketing purposes, you may want to consider a payment gateway that is flexible enough for your customers to use. Convenience is important as people these days tend to be very impatient and want things done fast.
Merchants could also have the option of using a combination of different payment processors on their site as this offers buyers more options. The important factor is that they need to be secure, easy to use and fast benefiting both merchants and customers at the same time.
What Is Payment Processing?
Have you ever bought anything electronically? Made a purchase off a website? If you have at any point participated in an electronic transaction, chances are you’ve interacted with a payment processing system. Payment processors enable the movement of funds from the buyer to the seller in ecommerce transactions. How do they work? What are the different methods for payment processing? Here’s a short primer on the process of making online payments.
First, how do payment processors work? A payment processor is a third-party payment management system that allows businesses to take and organize payments for goods and services offered in electronic transactions. For instance, if you make a purchase on a large website like Amazon, your money will be managed and deposited to Amazon via a payment processing company. If you pay with a credit card at a grocery store, your money goes through payment processing. This way stores can focus on their customers and retail and can leave the money management to a 3rd party.
What are the different methods for payment processing? If you ever use a debit or credit card, you are interacting with one of the largest forms of payment processing. Online services like PayPal and Stripe are other methods. These systems allow you to pay using a direct link to your bank accounts. Credit card payment applications that allow you to use your smartphone to receive payments are growing in popularity. Now venues that used to only accept cash can open their sales to customers who want to pay with cards. Payment processing systems have opened up a whole new method for making transactions that wasn’t possible 20 years ago.
Payment processing systems keep businesses running. They enable large companies to outsource their payments so they can focus on customers and services. Credit card companies and online payment processors in turn make a profit for their services by taking a small percentage of the total transaction for their role in managing it. Our society used to be cash- and-carry only. Now we have a myriad of choices when it comes to payment options for our transactions. If you’re headed to a local farmer’s market, you may be surprised how many vendors now take cards and other types of electronic payment processors. In fact, so many businesses take payment processors now, be they hot dog vendors or large retail stores, that it seems odd if a business doesn’t take cards or online payments.
Online Payment Processors
There are two ways in which you can set up an online merchant account. In the first method, you can have a third party online merchant account that will accept the online payment on your behalf. In this case you have to pay a certain amount as fees (you can use a free online calculator to calculate paypal fee calculator) for the service that they provide. In case you are just starting off a venture and are not sure of the success and the longevity of the business, then it is a good idea to go in for a third party online merchant account. This way you don’t have to worry about the payment aspect of the business. All you need is to check the payment at the end of the month and you can easily devote all your time in the betterment of your product.
You can also try out opening your own merchant account. To do this you will need a bank that will allow you to open a merchant account. There are a few requirements that you have to meet in order to ensure that you get to open a merchant account. The requirements that have to be met are that you should have a high rate of fixed income; you should have well rated credit worthiness and you must have a well-established bank account. For new companies that do not have a very good credit history, there are ways in which they can get a merchant account. The new companies can take the help of other reputable payment processing companies; these payment processing companies have a tie up with reputable banks that provide merchant account facilities.
It is important that you check and compare fees before deciding upon anything. The fees that you should compare are as follows.
1. Transaction fees: Transaction fee is a fixed charge that is charged for every online transaction. In case you are selling products in which your margin for profit is quite substantial, then the transaction fee loses its significance.
2. Discount rates: Discount charge is a flat percentage charge that is imposed on you for each and every online sale that you make.
3. Charge back rates and rolling reserve: These rates are associated with fraudulent transactions and repudiated purchases.
In case you are in a hurry to start off your business and are not in a position to get a merchant account, then you can try out credit card payment services such as Pay Mate and Pay Pal. In this case you will not have to pay any monthly overheads, the process is entirely hassling free and you can set up your account without cost in a few minutes. Visit www.feecalculatorbuzz.net to understand how fees are calculated by PayPal.
The only drawback in this case is that unlike in merchant account, where the customer sees your business name in their credit card statement, they will see the name of PayPal or Pay Mate in case the payment is made through them. This may cause confusion in the minds of the buyer as they might not be able to identify the source from where they have shopped.