The Functioning of Digital Payments in Online Retail Transactions
The process of eCommerce payment processing involves the secure and efficient acceptance of electronic payments for online transactions. As internet-based shopping and banking continue to expand, eCommerce payment processing has become increasingly popular among businesses that rely on online sales.
The primary goal of all eCommerce businesses is to ensure a seamless and hassle-free payment process for customers. To accomplish this, an eCommerce payment processor acts as the intermediary between the merchant and the bank, approving transactions and verifying the legitimacy of each transaction.
Key Components of eCommerce Payment Processing:
- Payment Gateways: These online services allow customers to make purchases through a secure connection, protecting merchants from potential hacking attempts and fraud. In 2018, Shape Security reported that approximately 90% of online retailer login attempts were illegitimate.
- Payment Processors: These companies interact with banks on behalf of customers, ensuring their funds are transferred accurately and securely.
- Merchant Accounts: Connected to the store's gateway, the merchant account charges customers' accounts directly once a transaction is authorized.
The Steps of eCommerce Payment Processing:
- When a customer is ready to complete a purchase, they enter their payment details, such as credit or debit card information.
- The payment gateway securely encrypts and stores this information before sending it to the payment processor.
- The payment processor then verifies the customer's payment details, checking their available funds and the validity of their card number before approving or rejecting the transaction.
- In the case of an approved transaction, the funds are transferred from the customer's account to the merchant's account, marking the completion of the transaction.
Although this process might appear complex, it only takes a few seconds to complete. This efficient and secure nature of eCommerce payment processing has made it an indispensable component for businesses that rely on online transactions.
For merchants looking for a suitable eCommerce payment solution, it is advisable to consider their budget and projected sales revenue when choosing a provider, as different fees may apply depending on the provider used. Additionally, it is essential to ensure that the payment solution complies with security standards such as those set by the Payment Card Industry (PCI) for the safe and secure handling of payment data.
This informative piece was originally published on our platform on March 18, 2022, courtesy of Anna Larina.
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- To ensure their online transactions are secure and efficient, businesses in the technology-driven economy often seek reliable eCommerce payment solutions that adhere to the latest security standards in finance and business, such as those set by the Payment Card Industry (PCI).
- In the fast-paced world of eCommerce, the efficient payment processing technology plays a crucial role in maintaining seamless customer experience during online transactions, thus positively impacting business success and revenue.
