Processing of payment basically means to buy goods and service through the internet by means of using a credit card for payment. The processing of the financial transaction is real time. It is used as an alternative for small businesses that have a significantly lesser turnover especially from transaction via cards or who are unable to activate a merchant account, a special account with any bank that acquires. There are virtually only three steps for payment mechanism by means of credit card.
1. Obtain a merchant account for getting a credit card from a particular bank.
2. Choose a gate way for process of information related to credit card.
3. Integration is done with payment gateway and payment processor through which the payment is done.
A payment processing company offers such services of payment of money for the goods sold over the internet and all that you need to do to integrate your website with a payment gateway is you need to add a ‘buy’ button on to your order or product page. This will help in directing buyers to the payment processor. By means of the buy button one can send information about themselves as a merchant as well as the order particulars to the payment processor. The process will act in the payment gateway’s environment or with in the website used and the payment gate way just acts as a focal point of sorts of sales devices.
The major charge backs in this system could be Charge backs are basically debits that are made against your merchant credit card by the bank. This can be because of a variety of reasons like for instance an error might have occurred in the transaction or in most cases because a buyer would have contested the charges on their credit card. Charge backs are a common occurrence in the transactions of the real-world. Yet, the anonymity that internet offers as well as the cardholders lack of being present physically to sign are more likely to have their bank issue a charge back against them. The best ways to avoid gateways that are fraudulent are to maintain order in a stage by stage fashion, maintaining documentation of all transactions and have the customers queries addressed in a systematic fashion.
The biggest advantage of Payment processing company is that it relieves the company of dealing with administrative work of dealing with the client’s merchant account, You are saved from setting up a secure gateway of payment as the one created for stock trading websites where huge money has to be spent, time spent could be saved than that spent on for a merchant account. The application procedures are also less strict when compared to a merchant account. For example a detailed version of your business plan, their suppliers, trading history has to be provided in case a merchant account is in use in which case the entire procedure becomes much stricter and usage becomes tedious.
There are a few disadvantages if you use such payment processing companies connecting through your website such as the customer who uses your website will know that the payment does not reach you directly even though it is connected through your website and the user makes payment through your own website.
The settlement period taken by payment processing companies is another problem faced as they take as much 30-60 days before the money reaches your account. Generally, the charges for a merchant account are high. Costs, however are thankfully falling as the market for such services is highly competitive. It is also necessary to make sure if the payment processor provides seller fraud protection which could save you from costs of fraudulent activities.
Repetitive use of the card can lead to the value of transactions made to be reclaimed from your own business. It is now possible to have insurance to cover any sort of potential risks that you are liable to face.