Payment solutions for e-commerce is a topic of high interest, and it is understandable that those involved in such a venture would want to make sure they are getting the best out of their investment. However, it may be a good idea to consider not only the needs of the enterprise, but also that of their clients and vendors.
It is difficult enough to run a business in the traditional manner – a shop is usually a place where a few items are sold at one time and some of these are for the satisfaction of the customer. These are often goods or services that are bought for personal use and are purchased on a regular basis. If the company does not keep track of the items or supplies that are available, this can lead to confusion if there is an error. This is where merchant services come in.
Payment solutions for e-commerce businesses usually come in three forms: merchant services, credit card processing, and check services. When the company is operating on a small scale, the credit card processing is sufficient, but when the enterprise is starting out it is often better to use either the processing option provided by the credit card company, or the payment gateway provided by a third party. This enables the enterprise to handle the processing themselves and not have to rely on the services of a third party.
The two main providers of payment solutions for e-commerce enterprises are the processing service provider (PSP) and the gateway provider (GPP). Each service is offered as a standalone application.
The PSP is the payment gateway, which provides a way to accept the data entered from the client and send this data to the relevant payment processor. A merchant can then log in using a username and password to control the funds flow in their account, and can choose to accept credit cards directly from their own accounts.
Gateway providers usually provide an interface to manage the payment gateway and can be integrated into the PSP for use by merchants. Once the user has registered with the provider, the gateway will act as a point of contact between the merchant and the payment processor. They are responsible for maintaining the records of the various transactions that have been made and sending any relevant notifications to the merchant. If any of these activities are not completed, the PSP will notify the merchant.
The cost of these types of services can vary depending on the provider. It is likely that the PSP will be cheaper than the GPP, but in the event that the merchant needs more functionality, they will charge a slightly higher rate.
The choice of payment gateway will depend on what you need and how much the provider will charge. However, it is worth remembering that all gateways are different and will have varying levels of sophistication, and are based on different methods of transaction processing.
There are two basic types of payment gateways available, namely the two way and the three way gateways. In the two-way model, the merchant only needs to provide the username and password to access the gateway, and the gateway is able to complete the transaction, while the other uses the same username and password to conduct both the two way and three-way transactions.
A three way gateways also has the ability to process both the two way and three-way transaction, and is based on a database. However, it cannot perform the reverse of the two way or three-way transaction. It is more sophisticated than the two-way gateways and also allows the user to enter the information into different fields for billing and payment.
When choosing a payment gateway, it is a good idea to do some research about the gateways that are available to find out what options are available and the providers that are available. Some of the gateways offer the option to use them as a hosted service, where the gateways are maintained on the server of the service provider. This means that the service provider will maintain the data, and all the gateways are integrated, so that if one gateway experiences problems, it can be quickly replaced.
A payment gateway is the most expensive component of the payment solution and it should be chosen carefully, as it is the primary method of access for your online business. While this can seem like a large investment, it is necessary if you want to increase the security of your transaction. It is worth considering the security aspects of a gateway before making the decision of which gateways to use. The choice of payment gateway is an essential part of your e-commerce system.