If you have started an online business, or you’re looking into the possibility starting one, there are numerous details that need to be attended to before you can actually sell a single item from your offer. You need to get your potential customers interested in your products (marketing), make it easier for them to find you online (website and SEO) and finally, offer them an efficient way to place their order and receive the product or service that they have ordered (payment processing). It is about the last item that we will talk about here, the other two being already covered on our blog.
What is payment processing?
Payment processing is a way to connect the credit card holder and your business in order for a payment transaction to be made for the services/products that you will then provide. In the world of online trading, this incorporates a chain of events in a sequence that is complicated to explain in few words.
Suffice to say that during processing, the credit card is verified with Visa or MasterCard (or whatever else) and it is checked whether there are enough funds to complete the transaction.
Why is it important?
Payment processing is vital for any online business simply because without it there is no possibility for accepting credit card payments (aside from PayPal, which we will explain later) on your online store. The advantages of working with credit card payments are numerous and include:
- The ability to sell things 24/7 – With an online store, you do not have to have working hours, as there is no need for clerks to operate cash registers and assist customers. Everything is done through your website, and the funds are transferred automatically.
- Boosting customer experience – Everybody enjoys shopping online, as it saves both time and effort. With the added benefit of accepting different credit cards, you will be able to attract a wide array of customers.
- Boosting credibility – When you are able to accept various credit cards as payment, you will be no different than the powerhouses like Amazon or Target. This will also reflect in the eyes of potential customers, as they will see you as reliable as the aforementioned companies.
Why should you go for a payment processor instead of, say, PayPal?
They are basically the same thing, right? Well, no. While PayPal enables online businesses to accept credit card payments, they may only do so through PayPal. If the customer has no PayPal account, then no transaction can occur. This is because PayPal is its own payment gateway which works only with PayPal and nothing else. It’s an efficient system, but not for online selling. Why? Because:
- Some people do not want to work with PayPal – There are some persons who find that owning a Visa or a MasterCard should open enough doors for them (and I think they are right). They do not want the added hassle of opening/logging into a PayPal account just to make a purchase. Some also find PayPal to be unsafe and they avoid it.
- Some people are forgetful – I am a prime example for this. I have a PayPal account, but, I’ve forgotten the login details for it, which is why I choose to operate with websites which accept my credit card directly. After all, all credit card information that I need for that transaction are on the card itself, I cannot forget them. And a lot of people think like me. It’s 2017, after all, and we are getting lazier.
- Competitive fees – With PayPal every transaction is subject to a fee. The fee is set by PayPal and there is no way to change how much you are paying them for conducting your transactions. On the other hand, it is possible to compare credit card processing companies and see which one gives you better rates and fees, and it is possible to eliminate some fees altogether.
- Faster payments – This is also a case of eliminating one step in the process. With PayPal, you get your funds after three or four days after the sale, because there is the added transaction of depositing the funds from your PayPal account into your bank account. However, with credit card processing, there is no intermediary, as the funds are transferred from the cardholder’s bank to your account and all it takes is for the transaction to get cleared.
Staying afloat as an online business is hard nowadays, with everyone trying to get their hands on a piece of that sweet pie, but customer satisfaction is a sure-fire way to stay on top of the game. As we’ve proven, online payment processing is one way to satisfy your customers, so be sure to stay ahead (or keep up with) your competition.