Increasing cash flow is a top priority for any business out there. As a result, many companies are turning to
How Do Online Payments Work?
The process starts when a customer submits a payment for an invoice. Once payments are sent, the payment gateway takes over and passes the order information securely between you, your client, their credit card provider, and your bank by encrypting sensitive information. The process below will go through the entire online payment data flow:
Step 1. The merchant submits a credit card transaction to the credit card Gateway on behalf of a customer
Step 2. Payment Gateway receives the transaction information and passes it via a secure connection to the Merchant Bank’s Processor.
Step 3. The Merchant Bank’s Processor submits the transaction to the Credit Card Network (a system offinancial entities that communicate to manage the processing, clearing, and settlement of credit card transactions).
Step 4. The Credit Card Network routes the transaction to the Customer’s Credit Card Issuing Bank.
Step 5. The Customer’s Credit Card Issuing Bank approves or declines the transaction based on thecustomer’s available funds and passes the transaction results back to the Credit Card Network.
Step 6. The Credit Card Network relays the transaction results to the Merchant Bank’s Processor.
Step 7. The Merchant Bank’s Processor relays the transaction results to Credit Card Gateway.
Step 8. The Customer’s Credit Card Issuing Bank sends the appropriate funds for the transaction to the Credit Card Network, which passes the funds to the Merchant’s Bank. The bank then deposits the funds into the merchant’s bank account. This step is known as the settlement process and typically the transaction funds are deposited into your primary bank account within two to four business days.
Costs of Gateways
There are costs associated that go along with the benefit of being able to accept payments online. Costs typically associated with payment gateways include discount rates, which are commissions taken from your customer’s payment and can range from 2-6% of the sale. Other costs include one-time setup fees and monthly fees which can vary by gateway. If you are processing a low number of online billing transactions a month, it’s important to take these various costs into consideration.
There are numerous benefits of allowing your customers to pay invoices online. From increasing cash flow to giving customers more options to pay, accepting payments online can prove to be a good business decision. If you are looking for more information on how
By Azox – E-Commerce for Microsoft Dynamics GP