As our world continues to move further into the digital age, online shopping is more popular than ever. With these changes in consumer preferences, your business needs to make sure that it stays in the line of sight with your customers. A large part of that is having an online payment service. An electronic payment service will allow your customers to quickly and efficiently purchase products or services from your business. Finding the best electronic payment service for your business is imperative to the success and growth of your business. In this article, you will learn what electronic payment services are, the benefits of using them, and the most popular online payment services.
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What is an Online Payment Service?
There are several terms that are used nearly interchangeably when describing online payments:
- Payment gateway
- Payment processor
- Merchant account
- Payment provider
- Payment service or payment system
Though each of these is distinct, they all refer to a company, service, or application that acts as a financial middleman between your website and your customer, and between both of you and your bank accounts. Each facilitates the completion of online transactions, and the processing of online payments.
A payment gateway is a service that receives the online payment request from your website and directs it to the payment processor. Imagine the payment gateway as the digital equivalent of the point-of-sale machine that you would put your card in at the grocery store.
A payment processor is a service that validates the purchaser’s credit card details and checks if they have sufficient funds in the account to cover the payment. If the customer has sufficient funds, then the transaction is authorized, and the funds are transferred from the customer’s account. The status of the transaction is transmitted back to the payment gateway which then sends a status message to your website. The payment processor company may also provide you with the equipment you need to accept in-person payments, such as a card swiper.
A payment provider, or a payment service provider, is the company that operates the payment gateway or payment processor services. Sometimes, a payment provider will operate both.
Payment Service or Payment System
Where a payment provider offers multiple types of payment getaways, with different features and pricing, each type is referred to as a payment service or a payment system. For example, PayPal is a payment tool that offers a number of payment services or payment systems such as PayPal and PayPal ExpressCheck Checkout.
A merchant account is another important term when talking about electronic payment services. When an online transaction is successfully completed, the funds are transferred from the purchaser’s account to your merchant account. A merchant account is a special kind of bank account that exclusively holds the funds from credit and debit card transactions. To accept online payments, you need to set up a merchant account with your payment provider. Funds accumulating in your merchant account are transferred to your organization’s bank account on a regular basis.
Why Use Online Payment Solutions?
If your business is similar to many small businesses, then you collect payments mainly through cash or checks. While this can work for a while, adding electronic payments provides a number of advantages to you and your supporters.
Meet Customer Expectations
People are increasingly comfortable paying online. When members, customers, or supporters are ready to sign up, register for an event, or make a donation, they want to do it quickly and easily. In fact, customers often consider websites that don’t support online payments as being out of touch.
Improve Efficiency and Speed
Online payments are faster than manual payments since you don’t have to wait for the check to arrive in order for it to clear. The whole process, from submitting an online payment to updating your bank account, can take a matter of seconds. The end result is better cash flow for your organization and almost immediate confirmation of transactions. Prospective members won’t have to wait to join your organization, and participants will know right away whether they’ve successfully registered for an event. Option, the electronic payment service, lets you know right away if the person making a payment has sufficient funds to cover the transaction. This is much easier for a business owner to track cash flow rather than finding out a week later when the check bounces.
Automated payments also save you the trouble of depositing a check and recording the payment manually. Once you set up online payments for your website, they are automatically processed. You don’t have to handle or store any credit card information. Any updates to member records are handled automatically.
Popular Online Payment Services
Most modern online payment services offer easy-to-use, fast, and secure ways to pay. Search companies do so by eliminating the need to enter long card details or personal information. Instead, the offer is in storage payment methods, or third-party processing to speed up the checkout process. Here is a list of the most popular online payment tools.
Alongside credit and debit cards, PayPal is one of the most dominant payment methods available today with over 254 million users worldwide. PayPal is an e-commerce payment processing company that allows users to set up a PayPal account and pay a fee for each cash transaction. Many customers prefer her to check out with PayPal because it’s so simple and quick to use. In addition, customers perceive PayPal to be a very secure way to shop online. Used by over 17 million businesses worldwide, PayPal claims that customers that use it’s services to checkout convert at higher rates compared with other payment options. It’s important to keep in mind the rules and fees will vary depending on the currency and amount of the purchase.
Amazon Pay is another big player in the online payment space. Like PayPal, Amazon Pay is a digital payment processing service that allows customers to pay online using their Amazon payment methods on third-party websites. The details are already in the shopper’s Amazon account to complete the transaction and provide a speedy checkout experience. Online results can certainly benefit from Amazon’s undisputed popularity across the whole web, as the majority of customers already hold accounts with Amazon.
With hundreds of millions of users already saving their card information to the Google account, Google Pay could offer an extra layer of convenience for a significant number of your customers. Trusted worldwide, Google Pay lets shoppers choose from safe payment methods in their Google account in order to check out quickly and smoothly on third-party websites. On top of this, your customers can also store-branded gift cards, loyalty cards, and offers with Google Pay. This helps you to build brand affinity and provide a seamless shopping experience that is entirely online. Google pay is also free for both you and your customers to use.
Authorize.net is a popular payment gateway service provider that works with your existing merchant account so you can accept credit cards, electronic checks, and digital payments like Apple Pay or PayPal via your business’s website. Since your customers don’t have to exit to third-party websites, you can be more credible. Additional features include automated recurring billing, security and fraud prevention tools, and the ability to sync with QuickBooks. It’s important to note that there are included fees. There is a $49 set up fee, a $25 per month gateway fee, and a 2.9% plus $.30 per transaction.
Square has become one of the most versatile payment solutions for small businesses. It allows you to accept payments using a mobile card reader. This converts your mobile devices into a POS system. Square also provides fraud protection, deposits on demand, and the Square Stand for larger businesses. With the Square app, you can build a customized register, as well as issue receipt invoices, track inventory, view sales reports, and manage timesheets. The mobile card readers are free, while the Square Stand is $99. There’s also a 2.75% per site for all major credit cards.
If your business requires a tool that allows you to accept payments both online and in-store, then Shopify may be a great payment service for you. In fact, the sales that you make either online or in-store sync through Shopify so that you can track your inventory and analyze sales data. Shopify also lets you build a customizable online store so that you can accept orders and payments online. It also integrates with your shipping carrier and services including Xero, QuickBooks, MailChimp, Amazon, and social media platforms. In order to accept in-person payments, you can use Shopify’s free card reader, which is similar to Square.
Start Using Electronic Payment Services Today
Online parent services can allow your company to grow in ways that will allow you to be as successful as possible. If you want to learn more, contact us today!
- What are online payment services?
- What is a merchant account?
- Why should you have an online payment solution?
- What is PayPal?
- What is Shopify?