Payment processing is perhaps the most daunting aspect of the whole puzzle when you just launch. And that can be grasped perfectly. After all, this is the job, since you are starting a new online shop, to process financial details of your customers, such as credit card numbers, confidential personal data, etc. It is your sole duty, as the owner of an eCommerce shop, to ensure that the data from you are kept first and foremost.
Fortunately, when you start to look after it the payment process is not that difficult to find out. In most situations, other businesses struggle with challenging and heavy tasks in order to concentrate on the heart of the market. But we’re going to return to it. In this guide, we go step by step through the fundamentals of payment processing and clarify the difference between a payment processor, payment portal, and the trader’s account. The payment processing layer functions separately in this model and only intervenes when required.
When running a standard ecommerce store, you have your main store platform / system (like Shopify or WooCommerce) to take care of running your store’s website – showcasing your products, enabling customers to browse them and place orders. Then, the actual online payment processor usually takes place off-site. Your store only connects to the payment processing mechanism and sends all the essential details to complete it.
For many factors, this is achieved. It’s a much better model, first of all. The payment processing network is responsible for security issues and guarantees the safekeeping of transactions. You would have to do all this work if there was no external payment processing. The second explanation is that different payment processing systems, rules and regulations appear to vary from time to time, and if you do it yourself it is difficult to comply. Again you have the platform for payment processing that does this work.
Finally, from the viewpoint of the consumer it is also a more stable setup. For instance, I’m sure you would be confident in entering your credit card information through PayPal far more than you do in a random online shop. All in all, now that you – the shop owner – have no trouble with the credit card and can leave it only to you the greatest advantage of this offsite set-up with payment processing. You will concentrate on and produce sales while another person ensures that all payments are handled correctly. That said the payment processing system consists of three main components. Yeah, it’s supposed you; it’s:
- Payment gateway
- Payment processor
- Merchant account
So what exactly is the difference between a payment gateway, payment processor, and merchant account? All three elements work together to transfer money from the customer to the merchant (you), but it’s helpful to understand what each of them does throughout the process: