The Nature Of Payment Processing Software
Current businesses do not have any limits nowadays. Even very small businesses in a far village can go online with the help of online platforms and aggregator payment system. The payment is becoming a key concern while doing any business. Although it seems to be not so complicated, payment systems need to operate safely and accurately. This demands the usage of recent technology and innovations.
Before building your own business, an entrepreneur should analyze the payment system closely. It is necessary to understand how online payment works. There are many payment processing softwares. Therefore, it is crucial to know which factors they should be compared by.
eCommerce payment processing is what all people need
Online shopping has become a trend of recent years. Many people find it convenient to buy clothes, electronics, accessories, home appliances and others online. They can consider several options before the purchase. Making people able to buy with a touch of a finger creates new opportunities for any business, which immediately starts to grow in terms of profit and capital.
Thus, it is very important to know the payment processing industry well, whether you own a store or provide any kind of service. Online payment eliminates all boundaries that your business might have. Many different surveys point out that more than 70% of entrepreneurs agree that their online sales are increasing rapidly day by day. Another study by Dun and Bradstreet indicates that credit cards are used more often to purchase an item than cash. This proves the importance of payment processing platforms.
The features of payment processing software
Basically, payment processing platform consists of three main components, including:
- Merchant account. It constitutes a bank or other financial institution, which will keep your online money. You can select it independently. Without a merchant account your customers will not be able to transfer money to you.
- Payment processor is the company that checks whether a transaction is legal or not. In particular, it checks available funds, credit card validity or card limits. Payment processors significantly decrease the level of fraud and ensure high security.
- Payment gateway. It connects the credit card of your clients with your merchant account, because the direct transaction between the banks is prohibited. Without this component, you are unable to receive funds from your client.
Pros and cons of payment processing platforms
There are many payment processing softwares in the market, including PayPal, Google Wallet, Stripe, Skrill and Amazon Payments. They all can perform functions of the merchant account, payment gateway and payment processor. Their primary advantages are:
- open access in various countries
- personal data and fraud protection
- the usage of several currencies
- integration with many shopping carts
- useful features
However, all platforms have specific drawbacks. For example, Paypal is not subject to any regulations or laws and can act as it wishes. Some other software has high commissions per transaction. There are cases when payment processing platforms limit the number and amount of transactions per day.
In addition, all platforms are used for different purposes. Some might be more profitable for accounting purposes, while others for management. So, before ending up with one specific payment processing platform, you should observe options that are available in the market. This will help you to use the payment service more effectively and safely. However, it is almost impossible to operate without them properly.
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