Online Payment Processing
Ecommerce has moved on leaps and bounds over the past couple of decades and in terms of security it's now much less of an issue for your customers to put their credit card details into your checkout.
Much of this confidence has been gained through the technical advances made by those companies charged with processing the information supplied by your customers and the various fraud prevention methods they employ.
In this post I will be looking at who those companies are and how they operate as part of your customers purchasing process.
Internet Merchant Accounts
Historically it was the responsibility of your bank to provide a Merchant Account to enable you to take credit or debit card payments. In recent years other Payment Service Providers (PSP) have started offering Internet Merchant Accounts (IMA's), such as Elavon or Streamline. It is often easier to get an IMA from one of these providers if you are a smaller business since they have less strict application criteria.
The IMA provider is responsible for maintaining the relationship with the card schemes (Visa, MasterCard, American Express etc.) and act as the "acquirer" of funds from the card scheme. They can process payments in multiple currencies and settle the cleared funds with your traditional business bank account, you do not have access to the Merchant Account directly.
You will almost certainly be required to agree fees with your IMA provider to process payments, these are usually negotiable and dependant on the perceived risk your business may face in accepting credit cards.
Payment Gateway
The payment gateway is the link between your customer and your merchant account. They provide the technology, security mechanisms and reporting required to manage your IMA including transaction processing such as partial payments, refunds and approvals.
It's important that the Payment Gateway offers the most appropriate transaction processing features and customer facing options available for your specific business needs. For example, if your business offers subscriptions then the payment gateway must be able to offer recurring payments.
Many Payment Gateways will also offer you the ability to apply for your IMA either as part of their package or as an additional add-on. Either way, the Payment Gateway will usually levy additional fees, usually in the form of a monthly charge, on top of your IMA processing charges.
Examples of Payment Gateway providers include SagePay, WorldPay (part of RBS) and RealEx.
Redirect or Integrated
When choosing your Payment Gateway you will have to decide how you wish to integrate their process with your store. Will your customers be redirected to the Payment Gateway to provide their payment details or will they instead enter their details into a screen on your website for transmission to the payment provider behind the scenes?
Security
The days when users were concerned about using their credit cards online are mostly behind us. With more sophisticated methods in place to protect customers, merchants and banks from unauthorised or fraudulent transactions the growth of ecommerce has continued.
It's important that online store owners adhere to best practices at the frontline of the online transaction. PCI-DSS is a set of rules that those handling credit card details have to comply with. Regular audits are made to ensure that the merchant is sticking to the rules.
3D Secure is another obvious online card protection mechanism and in practice provides a further layer of security for the credit card owner. Most online retailers will now incorporate 3D Secure into their checkout process.
As well as the consumer facing security mechanisms, card companies also employ sophisticated fraud screening algorithms to ensure that the user of the credit card details is in fact authorised to make that transaction, these often manifest themselves when you are using your credit card to make a purchase that doesn't fit your normal spending patterns.
Paypal, Google Wallet and Amazon Payments
As well as processing payments from your customers using an IMA/Payment Gateway combination you can also offer providers such as Google Wallet and Paypal as a means to transmit funds from your customers.
These providers typically offer payment processing services without the need to have an IMA and usually require your customer to register their details with them. This can add additional steps to the checkout process which may put off some of your checkout.
As a positive though, many people will feel more comfortable storing their credit card details with these providers for retrieval as they are needed and without the need to enter the information through unknown websites.
