E-commerce refers to any businesses exchange directed with the help of the internet. Additionally, the most popular example of the e-commerce business is online shopping which is the recent trend these days. Hence, e-commerce can also include various types of activities, as an example, payment gateways, online sales, internet banking and online ticketing. In such a case, this merchant service plays a crucial role in e-commerce development service. Moreover, it can be defined as the mediator between the payment processor and the e-commerce websites. This system is necessitated for safe and secure payments authorization for your e-commerce website.
However, if you run an e-commerce website and you are new to the world of payments, then this may seem notably difficult and out of your knowledge. The actual truth is, the payment gateways are not as complicated as you may have initially assumed. So, here’s a closer look at what actually the service is and the importance of this merchant service for e-commerce websites. Hence, it is advised to scroll down and read on to know more.
Payment Gateway in E-commerce: Overview
Generally, this is a service which facilitates all the transactions of your credit card through your credit card processors. On the other hand, this merchant service is a simple software application as well. Basically, the service is a channel between the particular bank which rejects or accepts payments of the customer’s credit card via credit card processors and an e-commerce website.
Eventually, a payment gateway service is the final level of the online transactions process on an e-commerce website. Whenever the customers buy some products from your e-commerce website this merchant service takes care of the entire payment process. Additionally, without the payment gateway service, you are unable to charge the payment for the transactions of the products.
Purpose and Role of a Payment Gateway Service for e-commerce Business:
Basically, this services are obliged to handle all the transactions of the products through the internet via credit cards. In addition, this merchant service is a mostly comparable service as a POS (Point of Service) device does whenever you return the payment for the petrol of your vehicle. This service accomplishes along with your buying products and merchandise from a substantial retailer. Therefore, the major purpose of the payment service is to confirm the transaction of the products and payments between the customers and the e-commerce website.
Additionally, you need to keep a note that the transaction process cannot be completed without the approval of the service. Also, the customers are unable to complete the payment process and buy products without the permission of this merchant service as well.
In this matter of fact, the payment processor basically examines and transfers the data of the payment transactions. This service confirms the transfer of payments between the e-commerce website and customers.
Why do you Need to Rely on the Payment Gateway Service?
Payment gateway systems basically can be observed as the digital equivalent of the credit card processors. This feature of this merchant services makes this services completely vital in online payments and retail transactions.
Additionally, you might also come up with various types of Payment Gateway platforms for your e-commerce websites which are available on the market. Henceforth, it is very crucial to acknowledge some vital factors to choose the most useful merchant service for your e-commerce website. In addition, you need to consider whether the merchant service gateways guarantees simple and seamless payment transactions, compares to the premium-quality of standards along with the policies. Moreover, you need to focus on the service who can complete the transaction with the protected sensitive data to resist the fraud of the payment processing.
Generally, the gateway of the payment is called to authorize payment transactions between the customer or clients and your e-commerce website.
Therefore, if you run an e-commerce website, which simply signifies that you are processing the payment transactions of the products and merchandise over the internet. Thus, you must have a gateway to complete the payment transaction process of your e-commerce business. Most important, the payment merchant service gateway is the only system to accept credit cards through the Internet for payment transactions. The transactions of the product through the payment gateway service can be marked as “card-not-present” transactions. Only the merchant has the information of the credit card that the customers provide through which the entire transaction completes.
Workable Steps on ‘how Payment Gateways Works’:
The payment gateway seems very uncomplicated and simple for the customers while accomplishing the transactions for the products. At first, you visit an e-commerce website to buy some products or merchandise, choose the products or merchandise you want to buy, after that, add the merchandise that you chose to your cart to proceed further, and at last, check out.
Now, it is the time to enter the credit card information for the transaction of the payment and confirm your order for the merchandise. After completing the entire ordering and payment process, you can pat your back and relax until the product item reaches at your doorstep by the delivery boy.
However, from entering the credit card details to the confirmation of the product order is a little complex process. Additionally, this payment merchant service completes this entire transaction process of the product step by step.
The gateway process basically follows the below-stated six steps they are as follows:
At first, the customers and clients place an order for the merchandise and provide the complete details of their credit cards for the payment transactions. As earlier explained, an online transaction for the payment of the product over the system will be processed as a “card-not-present” transactions. Again, this might be the end of an extraordinary processing rate. Once the details of the credit card has been submitted to confirm the order of the product, then the entire credit card data encrypted and then sent on its way for the confirmation.
Now, in this step, the entire encrypted information and data of the credit card is first sent to the merchant’s processor. Basically, the merchant’s processor is the e-commerce company itself that actually processes the entire transaction of the payment for the product or merchandise.
Now, the merchant’s processor sends the entire information of the transaction for the payment to the credit card association. Generally, the credit card associations are MasterCard, Visa, Discover and American Express. In addition, these card associations require an interchange charge for each and every transaction of the payment through the merchant service.
In this step, the merchant service gateway will accept or reject the transaction of the payment for the product. Additionally, this merchant service will consider some crucial factor to accept the transactions for the payment. For example, the details of the particular credit card required to be valid. The card must have sufficient and enough funds to complete the entire transaction for the payment of the merchandise.
Also in this step, the approved user of the e-commerce website must also not have any freezes or holds and the transaction of the payment will be authorized. The most interesting part of the transaction is that the above-mentioned fourth steps take place in a matter of seconds!
Now, the transaction of the payment becomes authorized and accepted by this merchant service. Then, the particular issuing bank transfers the authorization and permission back to the customers or users in the payment processing network. Generally, the credit card association start the authorization process of the payment transaction then the authorization completes with the merchant’s business. At last, back to the e-commerce website through the payment gateway to process the transaction of the product.
Although the entire transaction of the payment only takes a few seconds. For the transfer of the funds from the users account to the merchants account it can take between one days to two days.
Setting Up a Payment Gateway for your E-Commerce Website:
Before you proceed further to set up a merchant service for your e-commerce website, the foremost thing that you require to do is to set up your e-commerce business legislatively. Essentially speaking, your business must have the tax ID number which is known as EIN (Employer Identification Number). After that, you require to open a bank current account for your e-commerce business form where all the transactions will be processed.
Also, you need to purchase a particular domain name and have a working website for the online business.
After considering all the factors from opening a bank current account to the website, it is necessary to choose a third-party processor for the transaction of the payment which includes PayPal or Due. With the help of the third-party processor, you can easily accept the payments of the products over the online.
In case, if you have a merchant account opened in the bank, then you need to ensure that your bank has all the merchant facilities. Such merchant facilities will grant the transaction of the payment through the service to connect seamlessly undeviatingly to your bank account. Moreover, the funds of the transaction are then transferred into your bank account from orders processed through the e-commerce website.
Also, you need to consult with your merchant service provider so that they can support and help you in setting up your account perfectly. Additionally, the merchant service provider will surely assist you by linking the bank account of your e-commerce business with their specific software and they will show you how to use that software to process the transaction of the payment.
After completing all these measures, you will be able to implement the merchant service into your e-commerce website for the online transaction of payment. Additionally, these measures may require little technical knowledge or ideas. Therefore, you need to hire and rely on a reliable merchant service provider to ensure that the gateway of the payment of your e-commerce website is running properly and securely.
Here, in this context, we have described all the aspects of the merchant service for an e-commerce website. Moreover, you will be able to know the purposes of the merchant service for an online business and how it works to process the transaction. By now hopefully, you have a detailed idea on the importance of merchant service for an E-commerce website.
Frequently Asked Questions
1. What’s the Difference Between Payment Gateways, Payment Processors, and Merchant Accounts?
If you are a newbie to the world of online payments, then there is a high chance that you have heard the names of some important terms which are very crucial for the online payment. Such as payment processors, merchant services and merchant accounts.
However, It can be a little confusing for you because you are new to online payments. Thus, let’s dive a little deeper into this matter.
Generally, the merchant service plays an important role as a mediator between the payment processor and an e-commerce website to complete the transaction of the payment. Additionally, this system securely approves the transactions for the payments for your e-commerce websites.
2. Which Payment Gateway is Best?
If you are running an e-commerce business over the online world, then it could be very troublesome to pick a merchant service which can fulfill all the requirements of your e-commerce business. Moreover, it is very crucial that you must choose the best gateway for your e-commerce website. Thus, here we have mentioned a short list of best merchant services for e-commerce website.
- InstaMojo Merchant Service
- Cash free Merchant Service
- EBS Payment Gateway
- PayPal Merchant Service
- FonePaisa Payment Gateway Service
- CCAvenue Payment Gateway
- Atom Paynetz Payment Gateway Service
- Citrus Merchant Service
- PayTM Merchant Service
- DirectPay Payment Gateway Service
3. What are the Types of Payment Gateway?
In this advanced technology era, the maximum number of businesses have moved away from the conventional payment methods to the merchant service. It generally enable instant payment, secure transactions, credibility for the merchants among the other advantages. Additionally, there are four major types of online payment gateways to choose from.
1. Hosted Payment Gateways
Basically, the hosted online merchant services manage your customer away from your ecommerce website’s checkout page. Additionally, the customers are redirected to the online payment service provider’s page whenever they tap on the link of the gateway. In this payment service provider’s page, customers enter the complete details of his/her credit card for the payment transaction.
2. Self-Hosted Payment Gateways
The detailed information of the payment is collected from the customer within the e-commerce website with this type of online merchant service. Moreover, the collected data is sent to the online payment gateway URL after that payment details are requested. Some online payment gateways need the details of the payment information to be presented in a particular format, whereas other online need a secret key and hash key.