Online business means the method of payment should also be online, and payment is the most important part of the business. Right?
Online payment has become very common nowadays, but do you know the whole process behind it? How does it actually work? Or how many types of online payments are there?
If not, then before going towards online payment for business, we need to answer some basic questions.
What comes under online payment?
Online payment can be defined as the payment for goods or services online. Online payment is a means of processing the transactions electronically, through the internet to facilitate the connection between the seller and buyer.
Who is a Payment Processor?
The mediator between the merchant and the bank involved in the transaction is known as the payment processor. This service provider authorizes the payment, by checking sufficient funds in the buyer’s account, no limits of the account, the validity of the card, and then processing the transfer to the seller.
What is the meaning of a payment gateway?
The front-end technology that sends the buyer’s payment information to the payment processor is known as a payment gateway. When Paying on eCommerce sites, payment gateways also authorize payments for card-not-present transactions. The payment gateway basically communicates the approval and the decline of the transaction between the seller and the buyer.
What does PSP mean?
Payment Service Provider(PSP) is an alternative for merchants who have lower card turnover, PSP gives sellers the capability to accept online payments without having to set up a merchant account. The downside of PSP is security concerns and frozen or terminated accounts.
How does it work?
How does it actually work? How does the amount from the buyer’s account reach the seller’s account?
This is how an average online payment works:
- First- The buyer adds the products
- Second- The seller then submits the details of the order and the data of the buyer to the payment processor.
- Third- The buyer then fills the payment data on the PSP’s secure order form.
- Fourth- The PSP sends the amount to the acquiring bank or in an alternate case to the payment provider.
- Fifth- The Acquiring Bank then sends the transaction to the issuing bank
- Sixth- The Issuing Bank verifies card details and authorizes the transaction, the funds are initiated.
- Seventh- The Acquiring Bank receives the authorization.
- Eight- The PSP receives the authorization from the Acquiring Bank and informs the seller
- Ninth- The Merchant informs the Customer of the transaction.
And this is how the money gets transferred safely from the customer to the seller.
How many types of online payment methods are there?
In regard to offline payment, online payment provides a variety of options for payment transactions. Some of the most used options used by both sellers and buyers are-
- Credit/Debit cards
- Electronic Checks
- Internet Banking
- Mobile Banking
Advantages of accepting online payment for your business
With business becoming online, the boundaries of business are also changing. And with that purchasing behavior also changes. For any business, maintaining cash flow is the most important priority. Keeping that in mind, most businesses are open to accepting payments online. Here are some advantages of online payment to a business-
- Payment in Instant!
Online payments enable instant payments for businesses. It also shuts all geographical restrictions and lets the client purchase without any physical presence. The process to accept payment online comes with instant notification of the transaction.
- More trust!
Buyers often consider those sellers more reliable who accept payment online. It encourages them to do business with the seller. The online invoice payment helps the customer with fraud protection which secures customers’ money in case of any delivery-related mishappening.
- No money? Still shopping!
Customers, even though they have a low balance in their bank account can still shop using credit cards. It also allows you to break down the payment into several installments if the item is too expensive.
- Referral marketing!
If the business has an online invoice payment system, the business can create an affiliate program, where the affiliates can earn referral commissions by sending potential buyers to the business. This will automatically boost the sale and create an affiliate network to increase revenue.
- The Impulse buyers!
An online payment method may influence impulse buyers to purchase items listed on the business’s website. Since the procedure of transaction is easy and gives multiple options of online transaction, buyers are more likely to grab the deal quickly.
- Recurring payments!
If the business is offering any subscription-based services where the customers need to make recurring payments after a period of time, the online payment is best suited for the business. Instead of sending notifications, it can automatically collect payments after a period of time.
What is the ICT circle?
The B2B Platform for ICT channel: Vendors, Distributors, Resellers, and System Integrators from all over the world can transact with each other using the utilities of this platform. The features offered by ICT Circle are easy to use and give flexibility to seamlessly indent sales, procurement, marketing, and training to its subscribers, ultimately simplifying the day-to-day processes of the ICT fraternity
Wanna learn more about the ICT circle?
Visit here: https://www.ictcircle.com/india