Online Payment Processing Explained!

Online payment processing can be overwhelming, confusing, and costly, if you fail to choose the right merchant service provider. Let’s try to understand what online credit card payment processing is all about, how does it work, and what are the fees, risks, etc. involved?

Online payment processing and credit card processing refer to the financial transaction taking place between the merchant and customer through online modes of operation, such as virtual terminals, e-wallet, and net banking among others. Credit card online payment processing, typically, involves a merchant, cardholder (customer), financial institution or card association (such as American Express, VISA, MasterCard, etc.), acquiring bank, issuing bank, and last but not the least the payment processor.

Every time a customer uses a credit card for a purchase, all the above-mentioned parties get involved. The process includes the following steps:

Different Types of Fees Associated with Transactions

The fees associated with each transaction vary depending on the merchant service provider you choose for online payment processing. Your monthly bill will include the following:

Transaction fees:

This type of fees can be broken down into cents and interchange per transaction and these are mandatory for credit card processing because credit card companies have set them. You have to pay this fee to the credit card companies, such as MasterCard, VISA, etc. for allowing the ability to accept credit cards. Interchange rates differ across the card types being used. The fee will depend on the card’s maintenance for the company, including perks, cashback, rewards, etc.  

Recurring fees:

Other than transaction charges, a lot of providers earn additional profits by imposing non-mandatory fees on merchants. While you may see these fees on your statement every month, they are never required as such for accepting credit cards. So, pay attention to the monthly statement fees, minimum fees, annual fees, and other fees on the monthly statement.  

One-off fees:

These are one-time fees that don’t repeat and they include early termination fees, reprogramming fees, terminal fees, address verification fees, payment gateway fees, chargeback & retrieval fees, and set up fees.

There are countless things you must watch out for on your monthly card processing statement. Merchant services providers, such as Payment USA, make online payment processing simple. The membership fee they charge is very low and this merchant service provider ensures full transparency in its processes. Prices are not hidden just to earn more profits.

How Does the Payment Processing Take Place?

No business is the same, particularly in accepting payments. Technologies that businesses use for transactions and payment processing play a significant role in your success. Hence, it is important to understand what your business needs and, accordingly, set up the most suitable payment processing technology solution available.

Invoicing forms an integral part of all businesses’ billing and a lot of businesses still depend on manual processes e.g. Excel templates for creating invoices. While it may appear a cost-effective option, manual invoicing tends to be a time-consuming task and there is no connectivity between data, which can be detrimental at times. Businesses that have a physical store and sell their products offline can benefit immensely from the physical card processing terminals. But, if you want to accept online payments, you will need an EMV smart terminal for accepting contactless payments.

Online carts are backed by payment gateways and they are essential for an e-commerce (online) store. Even a traditional store can benefit immensely by running an online store in parallel with their brick-and-mortar store. Online payment processing involves setting up your merchant payment account, integrating & activating a secure payment gateway, etc. Your merchant service provider (Payment USA) will help you accept online payments through online payment processing. For more information, please contact Payment USA.  

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