Speaking Chinese in a Marrakech market or using an online
payment processing system that doesn\’t handle the payment methods your
consumers prefer are both unlikely to result in a successful transaction.
The point-of-sale system of a business must also be able to
communicate with customers\’ payment methods in the same language. Online
retailers and brick-and-mortar retailers have various payment languages. For
this reason, it\’s crucial for e-commerce companies to be proficient with online
payments.
What are payments made online?
Online payments are the different kinds of payments made and
handled online. These include payments made with a mobile wallet, credit card
payments, ACH payments, and wire transfers.
Although the payment processors used for online and in-store
transactions may be the same, the point of sale (POS) is different in each
case. The physical checkout counter is the point of sale (POS) for an in-store
transaction. Your software payment solution is your point-of-sale system, and
for an online payment, POS is an online payment interface.
Businesses can utilize online payments to pay invoices or
cover payroll costs in addition to taking payments from customers online.
How payments do made online work?
Online transactions involve a customer, a seller, and each
party\’s financial institutions. Partners in payment processing like PayPal,
Zelle, or Square may also be involved.
By payment method, online payment procedures vary. Here\’s an
example explanation of how an ACH debit (automated clearing house debit)
internet transaction operates:
A customer makes a transaction and chooses to pay with an
ACH debit.
The ACH debit request is sent to the merchant\’s financial
institution by the merchant or a third-party payment processing partner.
The transaction is bundled with other ACH transactions by
the merchant\’s bank.
The batch transactions are received by an ACH operator, who
sorts them before sending them to the customer\’s bank.
The payment amount is credited to the merchant\’s account
after the transaction is processed by the customer\’s bank.
5 distinct methods of online payments
·
Paying with a credit card
·
ACH transfers
·
Debit card
·
Transfers through wire
·
Electronic wallets
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Online payment methods come with a variety of advantages for
both customers and businesses. Cost, speed, security, and customer base
popularity are among the variables.
1. Card payment transactions
Credit cards are often utilized for online purchases by both
businesses and consumers. The cardholder either pays off their entire credit
card balance at the end of each billing cycle or accrues additional interest
debt in the form of an annual percentage rate (APR) fee. The credit card firm
resolves the purchase debt with the seller. APR displays the total yearly cost
of the loan, which includes the interest rate and additional fees.
Businesses that take credit cards online and in person have
an edge over those that don\’t since many customers use them as their primary
form of payment. The per-transaction fee that many credit card processing
partners charge merchants can range from 2% to 5% of the total transaction
cost.
2. ACH transfers
Online payments made through the Automated Clearing House
(ACH) network, an electronic network that acts as a middleman between financial
institutions, are known as ACH transfers.
Batch processing is used for ACH transactions. As a result,
fees are kept to a minimum, although ACH payments may process more slowly than
other online payment methods. In contrast to wire transfers and credit card
transactions, ACH payments normally execute in one to three business days.
Employers regularly utilize ACH direct deposit to pay their staff, and many
financial institutions provide this service without any fees.
3. Direct debit
Direct debit is a type of ACH payment that uses the ACH
network to move money from one bank account to another. When clients use ACH
direct debit to pay for products or services, the financial institution of the
merchant orders the ACH network to transfer funds from the customer\’s bank
account to the merchant\’s bank account.
The recipient bank frequently holds transactions for an
additional one to two business days, bringing the total transfer time to one to
three business days. The ACH network processes direct debits in one business
day.
4. Transfers through wire
Online payments known as wire transfers are made directly
between banks rather than through a middleman like the ACH network. Faster than
ACH transfers, wire transfers typically have greater per-transaction
restrictions. Additionally, they have higher transaction costs, which typically
run between $20 and $30. Although wire transfers themselves are secure, because
they complete more quickly than ACH transfers, fraudsters like to target them.
If fraud is suspected, a business might halt payment throughout the
one-to-three working day ACH transfer payment processing period.
5. Electronic wallets
Any electronic payment mechanism (such as a debit or credit
card) saved on a user\’s devices (such as Apple Pay or Google Pay) or in the
cloud is referred to as a \”digital wallet\” under this general phrase.
Digital wallets enable users use current payment methods without having a
physical card on hand; they are not payment mechanisms in and of themselves.
Purchases made with a digital wallet can be made offline or online.
What to take into account when
selecting online payment methods for your business
Online payment options should ideally be affordable for your
technological needs and make it simple for clients to pay you. The easiest
online payment system to set up for your company is one that allows for speedy
launch of your online store.
Be sure to take your client base\’s wants and preferences
into account when selecting an online payment option. Older clients might feel
more at ease using credit and debit cards, but younger customers are more
likely to utilize digital wallets and be familiar with a variety of payment
processing partners.