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As online shopping increases, many businesses are setting up digital stores to accept online payments and attract more sales. To be successful, businesses must incorporate a streamlined online payment process. Before you begin, it’s important to know the “three Ps”: players, payouts, and prices.
Players: There are three main players when it comes to processing credit and debit card payments online, over the phone or in person. On the one hand, you are a business owner or trader. On the other side is your customer. Meanwhile, there are plenty of technologies that connect the two of you. 1. You are a trader. To accept credit and debit card payments from online customers, you need to partner with some major players. As a business owner, you will need a merchant bank (sometimes called an acquiring bank) to accept payments on your behalf and deposit them into a merchant account they provide. 2. Your customer. Likewise, your customer needs a credit or debit card to pay for your products and services. The bank that authorizes the card (gives you the money to pay) is called the issuing bank. 3. Technology. At the center are two technologies that enable you and your customer to transact. The first is a payment gateway, software that connects your website to a shopping cart processing network. The second is the payment processor (or merchant service), which does everything: move the transaction through the processing network, send you an invoice, work with your bank, and more. Often your merchant bank is also your payment processor. , which helps simplify things. Online Payments. As a business owner, it’s helpful to understand how money flows from your customers to your business. Payment processing has two steps: authorization (confirming the sale) and settlement (getting the money into your account). The authorization process goes like this: 1. Your customer purchases a product on your website using a credit or debit card. 2. That information passes through the payment gateway, which encrypts the data to keep it private and sends it to the payment processor. 3. The payment processor sends an inquiry to the customer’s issuing bank to verify that they have sufficient credit to pay for your items. 4. The issuer responds with a yes (acceptance) or no (rejection). 5. The payment processor sends back a sale approved response to you and tells the merchant bank to credit your account. All of the above happens within a second or two. The second part of the process (where you get paid) is settlement. 1. The card issuer sends the funds to your merchant bank, which deposits the money into your account. 2. Means are available. The adjustment process may take several days. Sometimes, your bank lets you access your money before you send it to them. They may also hold a section of your account that you can’t touch if the customer returns the items later (called a checkout hold). Pricing: We’ve covered how payments work, but what about the other side of the coin? What will it cost? As you might have guessed, everyone who touches a transaction wants to get paid, including the issuing bank, the credit card association (Visa, MasterCard, etc.), the merchant bank, and the payment processor. Most importantly, every time you process a sale, you pay four fees: a percentage of the transaction amount. The issuer is paid by taking a percentage of each sale, called the exchange. These fees vary depending on a number of things, such as the industry, the amount of the sale, and the type of card used. At last check, there were about 300 different interchange fees.1 and another percent of the transaction amount. Credit card associations (Visa, MasterCard, etc.) also charge a fee called an assessment. Another percentage of the transaction amount. Your commercial bank takes a cut by charging you interest. Here the amount varies depending on the industry, sales volume, monthly processing volume etc. Dollar amount per transaction processed. Every time you process a transaction (whether it’s a sale, drop or return, it doesn’t matter). Also, it may charge fees for setup, monthly usage and even account cancellation. Typically, the first three fees (interest) are quoted together as one rate, while the transaction fee is quoted separately (eg 2.9% + $0.30). Complicating the picture, most pricing structures generally fall into one of three categories: With flat pricing, you pay a fixed percentage on all transaction volume, regardless of actual costs. All above fees are included in this flat rate. For example, you charge a package of 2.9% of the transaction amount + $0.30 per transaction. For $100 in sales, your fee is $3.20. With Exchange Plus pricing, your merchant service charges you a fixed fee on top of the exchange point. Example: 2.0% + $0.10 plus 1.8% interchange fee. For $100 in sales, that’s a $3.90 fee. Of course, remember that there are 300 or more different interchange fees, so 1.8% can vary widely. In tiered pricing, the processor takes approximately 300 different exchange rates and aggregates them into three buckets (or pricing ranges): qualified, mid-qualified, and non-qualified. This makes it easier for you (and them) to understand. However, since the processor defines buckets as needed, this can be expensive. As an example, the fee you pay for a $100 sale could range from $2.50 to $3.50, depending on how it’s classified. Whether you’re expanding a brick-and-mortar business or starting a new venture to accept online payments, it’s important to know how online payments, players, and pricing work before the first customer says “check out.” That way, you’ll be prepared with a plan that works best for you and your business. For more information, including a full glossary of payment terms you need to know, download How Online Payments Really Work.
Paypal Credit Card Processing
The content of this website is provided for informational purposes only. You should always obtain independent, professional accounting, financial and legal advice before making any business decisions. 1 Visa, Visa USA Inc. Reimbursement Fees, April 2015, Interlink Interchange Reimbursement Fees, April 2013. MasterCard, MasterCard 2015-2016 US Region Interchange Fees, April 2015. American Express, American Express, October 2013, American Express Merchant.
How Payment Processing Works
Accept payments, process credit and debit cards, and offer country-specific payment options to international customers. This option requires more coding than standard checkout, but gives you more control over the layout of your checkout page and optional extras like “Cregeback Protection” for eligible purchases. Restrictions apply.
There are no setup or monthly fees, and you only pay when you get paid. Funds are usually transferred to your business account within minutes. From there you can transfer money to your bank.
It all starts with a business account. If you already have a personal account, updating or creating a new business account is easy.
Payment Processing: The Players Who Help You Get Paid
If your account is new, you will need to verify your contact information and add your bank account to use it.
Tell us a little more about your business so we can enable advanced checkout. It may take a day or two to get approved.
This option requires encryption, so enter your developer account login once approved. Need a developer? You can find one in our solutions directory.
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Payment Gateways ≠ Payment Processors. Here’s Your 101.| Paypal
Whether you’re just starting out or have been in business for years, our payment solution can be customized to meet the unique needs of your business.
Zettle is our complete point-of-sale system that helps you take payments, manage inventory and track performance so you can monitor both online and in-person sales.
Charges unrelated to fraud or non-received product (INR), damaged product, not as described (SNAD), unprocessed refunds and duplicate charges are not covered by chargeback protection. Chargeback protection is available for accounts enrolled in advanced credit and debit card payments. can be subjected to
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