Payment Processing – A Timeline of Steps Involved in Online Payment Processing

The steps involved in online payment processing have significantly reduced the waiting period and hassle when purchasing commercials products and services. With new technologies and payment processes, people can easily purchase products and one-time services, set up recurring payment, and streamline payments that allow sellers to accept new orders 24/7.

In the past, many ecommerce payment processing services were far from intuitive and often costly. However, today there are dozens of reputable companies pushing easy-to-use online payment processing systems that can handle credit card transactions, bank transfers, and real-time orders at the fraction of the cost. While there certainly isn’t a shortage of payment service providers for you to choose from, how exactly does online payment work? Let’s go through the primary steps.

  • Step 1: The buyer submits a payment request through his/her cell phone, computer or mobile payment processor (i.e. SWIPE).
  • Step 2: The service provider routes the data via a secure connection to the buyer’s bank or credit card company.
  • Step 3: The buyer’s bank either approves or declines the transaction based on the buyer’s available funds or credit. If approved, the transaction is routed back to the payment provider to be processed.
  • Step 4: The payment provider stores the transaction and send a record to both the seller and buyer.
  • Step 5: The goods or services are sent to the buyer and the buyer’s bank sends the funds to the seller.

All of this can happen in a matter of seconds once the buyer submits a request to purchase.

Having an understanding of the benefits of online payment processing and the types of payments that you are able or want to accept as a new business is one of the most important steps to tackle as an ecommerce seller. Almost every eCommerce payment processing service accepts credit card payments because it is one of the most common forms of payment. There are also eChecks and ACH (bank) transfers, which pull funds directly from the buyer’s personal bank account.

The benefits of streamlined online payment processing steps that drive business success include global reach, electronic records, advanced fraud protection and secure transactions, simple integration into various website platforms and bank processing systems, and user-friendly features. These convenient features will make it easier for consumers to purchase your products and services and to keep up with a large demand.

Most of the professional payment processing service providers can configure their payment services to suit your business needs. Mobile payments comprise one of the newest forms of online payment processing. Instead of using credit cards, a buyer has to simply send a payment request via a text message or a software application that’s linked to a credit card or bank account. And while there is a concern of eCommerce fraud, added security measures such as a security pin helps diminish the chance of this occurring.


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