All businesses have a payment process, whether they are online or in-store. These payment processes include a payment processing system and a payment gateway to complete transactions ensuring that customers spend little time and have a better user experience while checking out.
Debit or credit card transactions consume less time to complete, but the process is more advanced than simply tapping your card on the POS machine. The payment processing system is layered and includes many parties for each transaction. These include:
- A payment gateway
- A payment processor
- Credit/debit/bank company
- Merchant’s bank
Understanding the Payment Processing System
A payment processing system should handle the transaction on behalf of the Business. It acts as a middleman between the customer and the seller. The payment process begins as the customer checks out items from the cart. These include:
- Submitting customer card details to the merchant
- The Business’s payment processor collects the information
- The information goes through a payment gateway (assuming it’s not integrated with the processor)
- The details go to the buyer’s bank to trigger an authorization
- The buyer’s bank submits payment to the merchant’s bank.
Card payments are dominant in many countries. But there are other acceptable means of payment. Bank payments are attractive because they are simple, reliable, and cheap when collecting recurring purchases or one-off transactions.
Choosing the best payment processing provider to facilitate transactions improves customer experience and retention.
An Overview of Payment Processing Systems
The intricate process after the customer submits their card takes only seconds. To complete the transaction, it must pass through authorization, funding, and payment. At the point of sale (POS), the merchant bank requests the payment processing provider to authorize the transaction.
What follows is a back-and-forth transaction process that includes the following steps:
- The payment processor provider tenders the transaction to the card organization linked to the issuing bank.
- The issuing bank can either reject or accept the transaction
- The issuing bank sends the transaction status (approval or rejection) to the merchant.
If the issuing bank authorizes the transaction, the next step is settling the funding by depositing the payment to the merchant’s account. The customer’s card association connects to the issuing bank that facilitates payment.
The issuing bank responds to the payment request by activating the following steps:
- Charging a fee/sum from the cardholder’s account to facilitate the transaction
- Transferring the requested amount to the merchant’s receiving bank (minus the interbank fee).
- The merchant’s bank gets the amount and deposits it into the merchant’s account.
Guide to Choosing the Best Payment Processing Provider
Only a tailor-fit structure suits some enterprises, as it depends on your Business’s nature. Do you have a brick-and-mortar store, or do you operate solely online?
Regardless, the best credit/debit card companies should offer convenience by providing user-friendly features, securing customer data, and offering low transaction fees. Businesses that don’t have a ‘cash only’ policy need a reliable payment processing system to receive money at their behest.
Payment processing providers offer varied pricing packages. Before settling for any, consider the following:
5 Factors to Consider when Choosing the Best Payment Processing Systems for your Business in 2023
Cost-effectiveness is determined by transaction volume, transaction value, and approved payment methods, all quoted differently by various payment processors.
Flat rate pricing and interchange plus pricing are the two most common price structures for credit card payment processing. Interchange-plus pricing systems charge different fees to different card types, while flat-rate pricing structures charge merchants the same percentage rate (based on the overall transaction cost) regardless of the card type used.
Bankful is only one of many credit card processing services that uses subscription models, wherein users pay a flat monthly cost in exchange for eliminating per-transaction fees. Membership programs can be a cost-effective solution for businesses with a high transaction volume to offer reduced per-transaction prices to their customers.
Even though the merchant costs associated with credit card transactions are often higher than those associated with debit and ACH transactions, numerous small businesses allow credit card payments since their customers widely use them. With the prevalence of credit card payments, it’s natural to assume that payment processors deal exclusively with credit card transactions. Nevertheless, most credit card processors also handle debit and eCheck transactions.
If you plan on accepting credit cards, consider the various fees and other factors involved. For instance, several organizations that handle credit card transactions tack on extra costs for accepting card payments online rather than in person. If your company processes many credit card payments online, check into a payment processing system for a startup plan that provides discounted prices for such transactions.
Excellent Customer Service
The best payment options will be simple for you and your clients to implement. Additionally, they need to be trustworthy: When clients cannot make purchases, it can negatively impact customer relationships and revenue production if your payment processing system is down. Many different payment gateways have around-the-clock phone and live chat assistance, so if you have any questions or run into any issues, you can easily contact someone to help you out.
If you want to accept customer payments without any hiccups, finding a payment processing system with excellent merchant service is important.
In addition to the core payment processing features, many systems also include a variety of optional extras that may or may not be useful for your company, adding to the already high level of complexity inherent in accepting payments online. Providers may, for instance, allow customers to pay either online or in-store, provide a variety of POS systems (including payment systems and physical or virtual terminals), offer integrated merchant accounts to facilitate payment processing and business accounting, and supply specialized software for tasks like sales analytics and inventory management.
Choose a plan that includes only the benefits you will use to get the most bang for your buck. If you opt for the simplest payment method, your processing expenses will only go toward supporting services your competitors use.
Credit card scams are common. It’s a major issue for both you and your clientele. Before signing up, you should investigate the merchant service provider’s fraud prevention options. It’s important to use a trusted provider that can identify potentially dangerous deals and reject them. Both the data being transferred and stored should be encrypted.
Sensitive financial data should never be compromised, as the consequences are always catastrophic. If accepting payments online, you must partner with a payment processor that takes data security seriously. Ensure your chosen payment gateway offers a suite of fraud detection screening technologies to weed out potentially fraudulent transactions.
Types of Payments Processed by Payment Processors
Online payment processors frequently cover the following types of payments.
- Credit/debit cards
- Bank transfers
Why you Should Use the Bankful as your Payment Processing System
Bankful is Easy-to-Use
Bankful is easy to use and understand, even for non-techies. You don’t need technical knowledge or experience to use the platform. The interface is simple and intuitive, so there’s no reason why you shouldn’t be able to use it without any issues. You can also download the software on your computer and access the platform directly.
Bankful Provides Security
To keep your customer’s data safe, use Bankful as your payment processor because it offers high-security standards. The platform uses industry-leading technologies such as encryption and tokenization to ensure that your information always remains safe. This means that if someone tries to steal your customer’s data, they won’t be able to do anything with it because they won’t be able to read or modify anything inside their account.
Bankful Offers More Support Than Other Platforms
One of the biggest drawbacks of using other platforms is that they offer little support after the installation (which can take days). However, when using Bankful, this is fine because you can call them anytime if something goes wrong or there are any issues with their service.
Finding the best payment processing systems for your e-commerce site should cover the primary user experience that enables your Business to retain its customers. A smooth payment process like Bankful supports all transactions between merchants, buyers, issuing banks, and card associations. Get started with the best payment processor today!