Due to the covid 19 pandemic, online shopping has changed forever. Nowadays, the majority of people prefer to shop online. Online payments are growing 104 percent year on year. So most people prefer to pay online and if their preferred payment method is not available, they just drop that online store. So your e-commerce store needs to accept online payments.
You also need to make sure that people trust your online store, otherwise they won’t enter their Credit Card/PayPal details. There are different types of online payment preferred by online consumers. As a merchant, you need to keep everything in mind so that customers don’t abandon their cart and leave your website.
What happens in the form of online payments?
Online payments are basically payments made using the internet to the merchant’s bank account or any other wallet. There are many choices when paying online, like Paypal, Apple Pay, Google pay, Net banking, etc.
To understand online payments, you need to familiarize yourself with these concepts thoroughly:
Payment gateways
It’s basically a software application that authorizes and processes payments to a merchant’s website. The payment gateway accepts or declines the payment method you use by sending information to the server. This helps you to proceed with the payment or the declined greeting. In case your payment is rejected by the payment gateway, check your payment method and do it again.
Payment processor
It basically sends information to the card server to check for any form of fraud and check if the customer’s account has the required balance in their account. Once checked, the payment will either proceed or be declined. In case it is declined, check your balance or change the card and continue.
Seller account
It is basically a bank account created for business purposes that accepts online payments from customers. To accept payments, merchants need to sign up for a merchant account before, but they can now do so using a payment aggregator that is also a third-party software.
How does online payment actually work?
- The customer looks through the items and selects an item, then adds the item to the cart and goes to the checkout page.
- On the payment page, he/she chooses a payment method, say card, for him/her to enter the card details.
- Next, the transaction’s information is passed to the payment gateway to pass it on to the payment processor.
- The payment processor passes it to the card server to check for any form of fraud and to check the availability of the required funds in the customer’s bank account.
- The card’s network then sends information to the bank’s server asking it to release funds from the bank account.
- This information is then transferred back with the funds and the payment is successful.
Types of online payment methods
Online payment network is spreading. For a high approval rate, you need to make sure that you offer almost all types of payment methods and are flexible enough to offer it to local banks as well. Here is a list of the most commonly used payment methods:
Payment by card
Most customers today pay with their scam card or credit card. Statistics say that more than 60% of people prefer to pay by card. When the customer uses the card to pay, the merchant needs to pay the transaction fee. You must have noticed this when buying something when the seller asks you to pay some percentage more when you pay by card.
electronic check
While credit cards are more convenient to pay online, they charge hefty transaction fees. To avoid this, electronic checks were introduced. Electronic check payment is similar to cash payment. After the customer approves, the money is sent to the merchant’s server. No exchange fees apply, or even if there are, it’s usually very low.
Online wallet
A mobile wallet is an electronic wallet that stores customers’ login information and helps them pay within a fraction of a second. Every time they have to pay, they don’t need to look up bank details or card numbers. They can simply use their mobile wallet to pay for the transaction. Mobile wallets are popular and widely preferred due to the convenience they carry with them.
Invoice by email
Once you’ve made a purchase, you’ll receive an email with a link. You can make payments using just a few clicks. It is as convenient as a mobile wallet and also saves time.
Disadvantages of accepting online payments
- When a merchant accepts online payments, it increases the cost of fraud. There are many apps in the market that show successful transaction messages but the transaction hasn’t even started yet. This leaves sellers sometimes facing huge losses.
- Technical issues are the most common when it comes to online payments. This can lead to cart abandonment or inability to make a sale. Customers may feel disappointed and will not return.
- There are hefty service fees that apply to online payments, for merchants. This reduces the profit margins of traders, leaving them with lower profits than they actually are.
Advantages of accepting payments online
- Accepting payments online allows you to reach a wider and global audience, which is not possible with checks or offline payments. This increases the profits and reach of your online business.
- When you accept online payments, you improve the customer experience because online payments happen seamlessly. Especially after the pandemic, people have partly switched to online payment, so they prefer to pay online rather than pay in cash.
Conclusion
After the pandemic, digitization has become one of the most important. People now prefer to pay online over offline or in cash. Nowadays, a merchant accepting payments online is often preferred. So it is better to start accepting payments online to avoid cart abandonment.
Also Read: Processing Employee Payments
Categories: How to
Source: vothisaucamau.edu.vn
