Choosing an online payment processing system that does not allow the payment methods used by your consumers is equivalent to speaking Chinese at a Marrakech market: both approaches are unlikely to result in a successful transaction.
Similarly, a merchant’s point-of-sale system must be able to communicate in the same language as the payment method used by their customers. The process in which merchants collect payments is different in physical stores than in online stores. That is why ecommerce companies must be proficient in online payments.
What exactly are online payments?
Online payments are payments that are submitted and processed through the internet. Credit card payments, ACH payments, google pay business app, wire transfers, and payments done using a mobile wallet are examples of these.
While both online and in-store purchases utilize the same payment processors, the point of sale (POS) differs. POS is your actual checkout counter for in-store payments. For an online payment, POS stands for point-of-sale system, and your software payment solution is your point-of-sale system. Businesses may utilize online payment systems to pay bills or payroll expenditures in addition to collecting consumer payments.
Types of online payment:
There are five different types of online payments.
- Credit card transactions
- Debit card
- ACH Payments
- Transfers via wire
- Electronic wallets
Different kinds of online payment provide distinct advantages to both businesses and customers. Cost, speed, security, and client popularity are all variables to consider.
Credit card transactions
Credit cards were extensively utilized for online payments by both companies and people. The credit cards offered by business bank account pay the vendor for the purchase debt, and the cardholder either pays off their whole credit card amount at the end of each billing cycle or accrues extra interest debt in the form of an annual percentage rate (APR) cost. The annual percentage rate (APR) represents the loan’s yearly cost, which includes the interest rate as well as any extra fees.
ACH transfers are a sort of online payment transmitted through the ACH network, which is an electronic network that acts as an intermediary between financial institutions. ACH transactions are carried out in batches. This reduces fees but makes ACH payments take longer to complete than other forms of online payments. ACH payments normally take one to three business days to process, but digital current account and credit card transfers take 24 hours. Businesses regularly utilize ACH direct deposit to pay employees, and many bank institutions provide this service for free.
Direct debit is an ACH payment method that sends funds from one bank account to another using the ACH network. When consumers use ACH direct debit to pay for products or services, the merchant’s financial institution orders the ACH network to remove money from the customer’s bank account and deposit it into the merchant’s bank account.
Wire transfers are internet payments made from one bank to another that do not employ an intermediary such as the ACH network. Wire transfers send money rapidly and have larger transaction limitations than ACH transactions. They also have higher transaction costs, which often vary between $20 and $30 each transaction. Although wire transfers are safe, they are more frequently the subject of fraud than ACH payments since they process faster. If a firm suspects fraud, the one-to-three-business-day payment processing duration of ACH transfers allows it to halt payment.
A digital wallet is an umbrella term for any type of electronic payment (such as a debit or credit card) saved on a user’s device (e.g., Apple Pay or Google Pay) or in the cloud. Digital wallets are not payment mechanisms in and of themselves; rather, they enable clients to utilize existing payment methods without the need for a physical card. They consist of features like Tap & Pay that enable users to pay instantly. Digital wallet purchases can be performed both online and in person.
Final words before you leave:
Online payment solutions should make it simple for clients to pay you while remaining within your technological budget. A good online payment system for your company is one that is simple to set up so that your online store may be up and running quickly.
Consider your consumer base’s demands and preferences when selecting an online payment system. Younger clients are more likely to utilize digital wallets and be familiar with a variety of payment processing partners, whereas older customers may choose to use credit and debit cards.