May 26, 2022
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Webinars, videos, podcasts, and resources to learn how to improve your online payment processing infrastructure with practical, actionable t
BridgerPay is a payments operations platform that uses one API, customizable checkout, and a single admin interface to allow your business to integrate with any Payment Service Provider you want. BridgerPay offers fast, on-demand connectivity to any payment method worldwide. Our drag and drop interface gives you complete control over your payment experience. We empower your business to scale faster by simplifying how you manage payments.
What is Ecommerce payment processing and Payment Operation?
Due to the extensive usage of internet-based shopping and banking, eCommerce payment processing has grown in popularity. It is the process of accepting electronic payments for online transactions.
Although each eCommerce business is different, the objective should be the same: to make the online checkout experience as simple as possible while still ensuring secure payment transactions.
There are three elements of eCommerce payment processing, including:
Payment gateway: an online payment service integrated into the eCommerce platform through which customers can make payments for online purchases.
Payment operation: a company that communicates with and put money in your merchant account on behalf of customers.
Merchants accounts: It is the gateway that talks to your bank. The store’s gateway connects to the merchant account and it charges the customer’s payment information directly.
Payment operation vs Payment processor
There is some misunderstanding about payment gateway and payment processor. Both two elements attach and run together to help users in carrying out the payment process. However, they are different and have specific functions.
Payment Processor
Payment processors handle the actual money transactions like taking the customer’s money and crediting you. A payment processor acts as an intermediary between your store and your merchant account.
Payment processors provide three main functions:
Transmit the payment data between the customer’s bank and the merchant’s bank.
Provide merchants with the physical equipment needed to accept card-based transactions.
Help you create a merchant account by yourself or collaborate with third-party merchant services providers.
To make it easy to understand, I will give you an example. When a customer buys a shirt from your store, he chooses to pay using his stored credit card. After the customer fills in his payment information on the store’s website, the store is actually charging that credit to his account. The store notifies the merchant’s gateway that the charge was processed. The merchant’s gateway sends information to the payment processor to set up the payment in your merchant account. The payment processor then credits the merchant account, and the merchant now has money that comes from that stored credit card.
Payment Gateway
A payment gateway is the most common interface between your website and a payment processor. It is what you use to get customer data from your website to your payment processor. They are the payment methods customers see on your website’s checkout page, such as PayPal, Stripes, Opayo and more.
Payment gateways provide two main functions:
Take the customer payment data stored on your site and send the data directly to the payment processor.
Accept payment information directly from the payment processor without involving your store’s website.
How does eCommerce payment processing work?
Step 1: Open payment gateway
Whether customers are buying a present, paying a bill, or making an online donation, they begin an eCommerce transaction by entering their credit or debit card details at the checkout.
Step 2: Communicate to the payment processor
The encrypted payment details are sent to the payment processor via the payment gateway once they click the button to submit the information.
Step 3: Authorized or rejected
The payment processor alerts the card-issuing bank to check the transaction before deducting the sale amount from that user’s account. If the bank confirms that the consumer has sufficient funds, the transaction will be authorized. But if the transaction is rejected because of insufficient money, relevant parties are notified, including the customer and payment processor.
Step 4: Notify the successful transaction
Your payment processor then informs the payment gateway of the authorization or refusal. If the transaction is successful, the merchant’s website will receive a notification from the gateway. But at this point, funds from the transaction haven’t shown up in the merchant account yet. We need a final step.
Step 5: Credit the account
Within a few days, the money from customers officially appears in your account. The customer receives a receipt or order confirmation if the transaction is approved, and the funds are deducted from the client’s available credit or bank account and deposited into the merchant’s bank account.
Popular Online Payment Methods
Now you have understood how eCommerce payment processing works, let’s take a look at some of the most popular payment methods that may involve in this process.
Credit Card
Credit card payments are one of the most frequent forms of electronic payment, which is a little plastic card linked to an account by a series number. It also has a magnetic stripe implanted in it that may be read. When a customer uses a credit card to purchase anything, the credit card issuer bank pays on the customer’s behalf, and the customer has a specific amount of time to pay the credit card bill.
PayPal
Paypal is one of the most well-known and well-established methods of online money transfer. It is available in a variety of countries and supports over 25 different currencies. The Payflow gateway from Paypal is simple to set up and has no monthly costs. It accepts credit cards, has a digital wallet, and even offers loans.
Amazon Pay
Amazon Pay is also the best eCommerce gateway for mobile platforms. With this eCommerce payment solution, merchants can process both online and offline payments on their smartphones. The transaction is immediate and can be done without any registration. The eCommerce payment processing uses a tap-to-pay technology which is a peer-to-peer approach. To use the Amazon Pay services, you need an Amazon Payments account. It has provided all the requirements of eCommerce merchants like billing address, business and its owners’ information.
Stripe
Stripe works with some of the country’s most well-known B2C, SaaS, and product companies. There are no monthly fees, but processing fees are calculated based on the transaction size. They can handle high transaction volumes and provide good integration and support.
With our Stripe extension, you can easily integrate this payment gateway into your website. It provides a fast and simple checkout process and secures online payment with PCI DSS and PSD2 Compliance.
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2Checkout
Unlike Stripe, 2Checkout is available in a wide range of countries and is one of the most cost-effective payment processors available. They offer both hosted and in-line shopping carts. However, the API is complicated, making integration with eCommerce platforms difficult.
Square
You can sell online, and offline that is suitable for your business. For in-person payments, you don’t have to use the physical card; just using the mobile POS app that helps you to scan QR codes. You can charge with online invoicing, online store checkout, the virtual terminal. You can export and send invoices and payment links with the Square POS app.
ChronoPay
This is the best payment processing company if you want to purchase mainly via bank cards like Visa, JCB, American Express, or any payment systems such as WebMoney, Qiwi. The special thing about ChronoPay is that its services are free. You only have to pay on a commission basis after one month.
Payeezy
This is one of the oldest payment solutions that has served users in 30 years. It provides simplified eCommerce payment solutions to all companies in diverse industries such as Commerce, F&B, retail, finances so more. It accepts various payment methods like credit cards, debit cards, gift cards, and other prepaid card offerings.
Considerations when choosing eCommerce Payment Processing solutions
PCI compliance is required
The Payment Card Industry (PCI) is a non-profit global standards group dedicated to encouraging credit card acceptance and promoting trust in commerce. The PCI is the governing organization in charge of payment card data security. They are in charge of determining the amount of protection that a merchant requires. It is usually advisable for shops to purchase or build a PCI-compliant credit card form. Payment card providers have specific criteria for how you should handle your clients’ credit card information. This is not only plain sense, but it is also a best practice in the industry.
Tokens for sensitive payment information should be created
Some payment processors do not use the customer’s credit card information. They utilize a “card hash” that is not the same as the customer’s credit card number. The payment card industry (PCI) handles card information with care, and using card information safely necessitates at least “tokenization.” When the payment processor only looks at a number, this is known as tokenization. As a result, the merchant is unaware of the customer’s credit card number, and the payment processor is unaware of the customer’s credit card information.
The payment methods
It’s crucial to accept credit cards, EFT, or the merchant’s own CC mechanism as a payment method for processing. You may be able to take less than the entire CC procedure since the retailer does not charge a processing fee. Processing using a debit card is often less expensive than processing with a credit card. Processing, however, is never without risk, as we have seen with fraudulent chargebacks from credit card companies and protection from huge chargebacks going through.
Fees
The types of fees vary depending on the provider you use. There are three fees you have to charge when using an eCommerce payment solution such as: set up fees, transaction fees and monthly fees. Some providers will require you a membership fee.
When looking into service providers, you must define your budget and expect sales revenue. This can help you to find out the most suitable eCommerce payment service providers, and avoid over budget and save your money in the long run.
BridgerPay
BridgerPay is the world’s first Payment Operations Platform, built to automate the payment flows of your business with a Lego-like interface, so you can connect any payment method or tool, boost revenue, and optimize your payment experience.
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Conclusion
Whether you’re just established or managed a complete business, payments are a core component of your success. Understanding online payment progress and knowing the must-have features of suitable payment solutions helps you to choose the best providers and Payment orchestration. Whatever processing solution you choose, ensure that it enables online transactions that are easy for both you and your customers.
BridgerPay is a payments operations platform that uses one API, customizable checkout, and a single admin interface to allow your business to integrate with any Payment Service Provider you want. BridgerPay offers fast, on-demand connectivity to any payment method worldwide. Our drag and drop interface gives you complete control over your payment experience. We empower your business to scale faster by simplifying how you manage payments.
Bridger Pay offers Payment operation technology for making smarter decisions in real-time. The platform consolidates all available processing data to provide you with relevant guidance to improve your revenue streams, managed via a single admin portal.
The platform cascades transaction processing across providers and countries to maximize conversions. Features a cashier and admin portal, customizable and providing full control of transaction routing. The Briger Button creates multiple revenue channels by allowing you to create a payment button and embed it in any website page.
:
530+ alternative payment methods
150+ currencies
200+ acquirers
40+ cryptocurrencies
Global acquiring
Acquiring flexibility
Smart traffic management
Advanced customization
Global payouts
FX solutions
Currency and risk management
BridgerPay — Learn More
BridgerPay is a payments operations platform that uses one API, customizable checkout, and a single admin interface to allow your business to integrate with any Payment Service Provider you want. BridgerPay offers fast, on-demand connectivity to any payment method worldwide. Our drag and drop interface gives you complete control over your payment experience. We empower your business to scale faster by simplifying how you manage payments.
The Payment Orchestration for Global Commerce indicates that the global market for payment orchestration platforms (POPs) is expected to grow by 20 percent each year from 2021 to 2026. For any business that needs to offer multiple payment options for customers worldwide, payment orchestration is a valuable service. If you’re new to this payment topic, keep reading to learn what payment orchestration is, the benefits of using this service, and how it works for businesses.
What Is Payment Orchestration?
Payment orchestration refers to integrating and managing the entire payment process, including payment authorization, transaction routing, and settlement. This process involves connecting to different payment service providers (PSPs), acquirers, and banks on a single, unified software layer. A payment orchestration platform is a type of software used to manage the online payment process for ecommerce businesses. Indeed, these services help optimize and simplify merchants’ typically complex payment process. Thus, a significant benefit of payment orchestration is efficiently managing your payment stack within one platform, rather than handling possibly dozens of integrations with different PSPs.
Benefits of Using Payment Orchestration
Whether you are looking for a custom-built or all-in-one solution, there are several benefits to consider when choosing a payment orchestration provider. Take a look at the top benefits below to help you make an informed decision for your business.
Enjoy Easier Payment Integrations
By using a payment orchestration layer, merchants can work with multiple local and global PSPs via a single integration. For example, a business that needs to offer an alternative payment method can easily connect with a PSP offering these customer payment preferences. This process is much easier than a merchant having to connect with third-party providers through different accounts or platforms. As a result, payment orchestration can streamline the integration process, saving businesses time and money to grow and reach new customers.
Offer Various Payment Preferences
A major advantage of payment orchestration platforms is that they give merchants access to a wide range of pre-approved PSPs. As business needs change, they can easily add numerous payment methods for their ecommerce website via a single API connection. This is ideal for companies with customers worldwide who have diverse payment preferences, such as credit or debit cards, mobile wallets, or “Buy Now, Pay Later.”
Boost Business Scalability
Businesses must find new ways to scale and adapt to the evolving payment industry. In payment orchestration, merchants will find it easier to achieve sustainable growth. For example, connecting to several payment service providers and payment methods via a single integration is significantly faster than connecting with each provider separately. With a wide range of payment options, merchants will create a positive checkout experience that leads to repeat, loyal customers. Indeed, this payment service allows business owners to accept region-specific payment types for domestic and international transactions easily. As a result, using a POP can help expand a merchant’s customer base globally.
Improve Customer Experience
A Baymard 2021 study found that 18 percent of U.S. adults abandoned their cart because the checkout process was too difficult or time-consuming. Payment orchestration platforms can help prevent cart abandonment by creating a streamlined checkout experience for customers. One way to simplify checkouts is to offer multiple payment options and providers, so customers can select their preferred method for purchasing products or services. By giving customers the freedom to choose how to pay, they will be less likely to leave an ecommerce site without completing a purchase. After all, customers do not want to waste time retrying their payment or using a new method. This service can reduce customer experience and lead to customers questioning a site’s trustworthiness. Indeed, better checkout flows will increase conversion rates, which means more profits for merchants.
Decrease Payment Processing Costs
While it may make sense to use a single PSP for new businesses, growing organizations will likely need to connect to multiple providers as they expand. Unfortunately, the cost of implementing and maintaining these connections can quickly add up, but a payment orchestration platform can decrease payment processing costs. Specifically, POPs can do this by incurring fewer setup fees for using several integrations, avoiding hidden fees that some providers charge for automated transaction routing, and routing transactions to processors with the lowest costs.
Track and Report Data in a Centralized Location
Any business knows how quickly things can get out of hand regarding tracking data analytics. Aside from simplifying the payment process, payment orchestration platforms provide a central location to track and report on payment data. This data encompasses every PSP and payment gateway baked into the merchant’s payment stack. Businesses can easily view, access, and share this data — securely and compliantly — with relevant entities, such as financial organizations or fraud detection companies. With quick access to everything, merchants can determine how to improve their business operations with real-time analytic reports.
Maintain Payment Security and PCI Compliance
Payment service providers must meet PCI compliance and other security requirements for digital payments, including payment orchestration platforms. Luckily, POPs are typically built on PCI-compliant vaults. In turn, this will reduce compliance scope for businesses. Additionally, payment orchestration providers stay up-to-date on the latest security rules to assist merchants in maintaining compliance with any PSP they use. To secure and protect customers’ payment information, POPs may also offer tokenization and fraud prevention services.
How Does Payment Orchestration Work?
Businesses that accept online payments depend on payments being successfully processed. Indeed, this ensures that payments are received for their products or services, so they can continue to grow. A key benefit of using payment orchestration is finding the best payment route to send digital transactions. One example would be sending payments to several payment processors, which can result in more favorable processing fees and help reduce false declines and, thus, a loss of revenue. Indeed, sending transactions to ideal payment providers can increase the number of authorized payments and conversions.
The payment orchestration process:
1. The customer adds a product or service to their cart on an ecommerce site. They select their preferred payment method from the merchant’s list of options at the checkout page.
2. Once the customer places the order, their payment details are sent to a payment gateway.
3. The gateway encrypts the cardholder’s payment information and then sends it to the acquiring bank and payment processor to secure this data.
4. Once received, the acquiring and issuing banks communicate to verify and authorize the pending transaction.
5. Typically, the acquiring bank will send the authorization response code to the payment gateway and the merchant. However, payment orchestration platforms use a different approach. If a payment fails, pending transactions are automatically routed to an additionalpayment processor to decrease the number of false declines.
6. If sending the transaction to the alternative payment processor works, the payment is approved, the customer doesn’t get frustrated with failed payments, and the merchant gets paid. It’s a win-win situation for all parties.
Additionally, POPs can manage payment settlements and billing, and create real-time payment reports within a single dashboard. Indeed, this makes it convenient for merchants to handle the entire payment process without leaving the platform.
Online Shopping Is Here to Stay
Whether you own a small, medium, or enterprise business, it’s imperative to use payment technology to optimize your payment process. Statista reports that there were 2.14 billion digital shoppers in 2021, a number that will only increase due to the convenience, product diversity, and cost savings that online shopping offers customers globally. This statistic equates to more than one out of every four people being an online customer. As illustrated in this article, payment orchestration is a robust service that can streamline your payment flow. Instead of wasting time and money connecting to different PSPs separately, paying their fees, and managing various compliance regulations, you can handle the entire payment process from start to finish on a payment orchestration platform. Further, POPs help you increase the number of approved payments by automatically routing transactions to the best payment providers. For customers, payment orchestration can help provide a more frictionless, streamlined checkout experience that leads to repeat sales.
Data Protection and Payment Orchestration
While payment orchestration has numerous benefits, your organization may require a custom payment solution that is not readily available with most POPs. In this case, consider partnering with a reputable tokenization provider that offers payment orchestration and data protection all-in-one. Leading providers like TokenEx offer the flexibility and freedom to route cardholder data via a single point of integration to connect to any combination of processors and gateways. A tokenization platform can help maintain PCI compliance, maximize payment acceptance rates, and secure payment data. Specifically, this is done through tokenization, which involves replacing the sensitive data with randomly generated, unique tokens that do not contain any of the original data. If a breach occurs, cybercriminals will only find tokens that have no real value on their own.
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BridgerPay
BridgerPay is a payments operations platform that uses one API, customizable checkout, and a single admin interface to allow your business to integrate with any Payment Service Provider you want. BridgerPay offers fast, on-demand connectivity to any payment method worldwide. Our drag and drop interface gives you complete control over your payment experience. We empower your business to scale faster by simplifying how you manage payments.
A payment gateway is a technology used by merchants to accept debit or credit card purchases from customers. The term includes not only the physical card-reading devices found in brick-and-mortar retail stores but also the payment processing portals found in online stores. However, brick-and-mortar payment gateways in recent years have begun accepting phone-based payments using QR codes or Near Field Communication (NFC) technology.
KEY TAKEAWAYS
Payment gateways are the consumer-facing interfaces used to collect payment information.
In physical stores, payment gateways consist of the point of sale (POS) terminals used to accept credit card information by card or by smartphone.
In online stores, payment gateways are the “checkout” portals used to enter credit card information or credentials for services such as PayPal.
Payment gateways are distinct from payment processors, which use customer information to collect payments on behalf of the merchant.
There are also payment gateways to facilitate payment in cryptocurrencies, such as Bitcoin.
How Payment Gateways Work
The payment gateway is a key component of the electronic payment processing system, as it is the front-end technology responsible for sending customer information to the merchant acquiring bank, where the transaction is then processed.
Payment gateway technologies are always evolving to reflect new consumer tastes and technical capacities. In the past, terminals would accept credit cards using magnetic strips and required paper signatures from the customer. With the development of chip technologies, the signature phase could be removed in favor of a personal identification number (PIN) entered directly into the payment gateway hardware. Today, contactless purchases are also available, with many customers now using their phones as a payment device instead of plastic credit cards.
The architecture of a payment gateway will differ depending on whether it is an in-store gateway or an online payment portal. Online payment gateways will require application programming interfaces (APIs) that allow the website in question to communicate with the underlying payment processing network. In-store payment gateways will utilize a POS terminal that connects to the payment processing network electronically using either a phone line or an Internet connection.
Payment Gateway vs. Payment Processor
A payment gateway is distinct from a payment processor, a service that connects the customer’s bank to the merchant account and facilitates the actual movement of money. You can think of these like two halves of the transaction: a payment gateway collects customer information for payment, and a payment processor uses that information to contact the customer’s bank and the merchant account, debiting one account and crediting the other.
Definitions
A payment gateway collects customer card information and encrypts it for later processing.
A payment processor uses that information to charge the customers’ bank or credit card provider.
Example of a Payment Gateway
Merchants can gain access to payment gateway systems through merchant acquiring bank partnerships, or else they can select their own payment gateway system. Large banks such as Bank of America (BAC) and JPMorgan Chase (JPM) have sophisticated payment gateway systems that they offer to customers along with their own merchant acquiring bank services. Ultimately, merchants can choose a variety of payment gateway technologies as long as they are compatible with the merchant acquiring bank that is being used for payment processing.1
One recent example of a payment gateway is Square (SQ), which emphasizes flexible mobile payments for retail businesses. The company’s Square Reader technology allows customers to easily accept payments at ad-hoc locations such as conventions or farmer’s markets, or through roaming storefronts such as food trucks.2
With the Square Reader payment gateway technology, a merchant can attach a small piece of hardware to their mobile phone which allows the customer to swipe their payment card for processing through the mobile phone’s electronic connection. The Square Reader sends the payment information to a merchant’s acquiring bank which then processes the information for the merchant momentarily.
It is likely that new products will continue to increase the versatility and speed of payment gateways. In recent years, blockchain startups have even introduced payment gateways for cryptocurrencies.
Payment Gateway FAQs
How Much Does a Payment Gateway Cost?
Payment gateways typically charge a combination of initial setup fees, a flat monthly fee, and a small fee for each transaction. Some gateways may also charge a fraction of each purchase. For example, Square charges a ten-cent fee on most card transactions, as well as 2.6% of payment volume. Stripe charges 2.9%, plus thirty cents per transaction. There may also be fees for equipment and installation.
What Is a White Label Payment Gateway?
A white label payment gateway is a payment gateway whose branding can be customized according to their client’s preferences. This allows merchants to receive payments through third-party services while using their own name and brand.
Can I Build My Own Payment Gateway?
While you could build a payment gateway from scratch, it would probably be too expensive to be worthwhile. Softjourn estimates that building a minimal gateway, to process credit and debit card transactions could cost a quarter of a million dollars, not to mention additional headaches of international transactions, foreign currencies, and regulatory compliance.3
Is Google Pay a Payment Gateway?
Google Pay is a digital wallet that makes it easier to interact with payment gateways. Instead of carrying around a credit or debit card, users can store encrypted card data on their phones, allowing them to safely pay without having their cards present.
Is PayPal a Payment Gateway or Processor?
While sometimes described as a payment provider, PayPal provides similar services to both a payment gateway and a payment processor. PayPal’s merchant accounts share many properties with a processor, allowing merchants to safely accept and redeem payments to their bank accounts. PayPal also offers a gateway service called PayFlow.4
The Bottom Line
Payment gateways are an important feature of the digital economy. By allowing customers to safely and securely share their credit card information, these systems reduce some of the barriers to online commerce. While the first payment gateways consisted of simple card-reading devices, they are now sophisticated systems to collect and authenticate PIN numbers, signatures, and other data for merchant transactions.
BridgerPay
BridgerPay it’s a definition from bridge and payment.
It’s a payment operation system for traveling, restaurants, ecommerce and more.
Learn More about bridger pay today!
BridgerPay is a payments operations platform that uses one API, customizable checkout, and a single admin interface to allow your business to integrate with any Payment Service Provider you want. BridgerPay offers fast, on-demand connectivity to any payment method worldwide. Our drag and drop interface gives you complete control over your payment experience. We empower your business to scale faster by simplifying how you manage payments.
As your business builds its online presence, you might consider expanding your customer payment options. If you give consumers as many payment options as you can, you open up more opportunities for customers to pay in the manner that they are comfortable with — giving them more incentive to become (or continue as) part of your loyal customer base.
There are many methods of online payment. The most popular methods you should consider accepting are Apple pay, Google pay, Paypal, and Amazon Payment.
While popular methods are good, many others use the same technology, making them worth investigating as well. However, it is important to first understand some terms, and understand how these payment methods are provided, processed, and accessed when you are deciding on which options to provide — so that you can make more informed decisions.
Virtual Terminals
Virtualization (the movement of physical devices onto cloud-based platforms), has led to an even greater number of online payment options. Virtual terminals and payment gateways are newer technologies in the payment process, allowing for multiple methods and devices to be used for purchasing.
Most card processing providers have implemented virtual terminal technology into their service offerings. A virtual terminal is a method of accepting payment from credit and debit cards without the card being present.
Virtual terminals are usually a web-based software program linked to your accounts, that allow transactions between you and your customers. You enter your customer’s billing information, card number, expiration date and security code, and the transaction should securely take place.
Payment Gateways
A payment gateway is generally linked to customer-facing transactions, through a web-based shopping cart on your website. When a customer finalizes a transaction, the information is encrypted and sent to the gateway, which forwards it to your card processor, which then sends it to the customer’s card provider to credit or debit their account.
Credit Card Processing
Credit cards are still the most popular way to pay for goods and services online.
To set up credit card processing on your website, (MasterCard, Visa, American Express, Discover), you need to have an internet merchant account (an exception to this is Paypal, which offers payment solutions which do not require a merchant account).
You can usually get an internet merchant account through the bank your credit cards are through. For credit card processing of all the major credit cards on your website, you may need to get internet merchant accounts with separate banks as many banks only deal with some of the credit cards involved.
You can also get an internet merchant account through a third-party merchant account provider, such as Merchant Accounts, Beanstream, Moneris, PSiGate or InternetSecure.
Merchant Account Advantages
The advantages of getting an internet merchant account through a third-party merchant account provider are that most don’t require any security deposits, are quickly set up, and often can be bundled with e-commerce service packages that include the internet gateway you need for online credit card processing (web point-of-sale) and a shopping cart.
Third-party merchant accounts may have higher fees. Discount fees, in particular, tend to be higher than if you had set up your internet merchant accounts through the banks.
Some of the fees you may encounter are:
application fees
setup fees
monthly fees
per-transaction fees
monthly minimums
non-qualified fees
cross-border fees
gateway fees
terminal fees
chargebacks
Make sure you get a complete written listing of all fees before you sign on with a merchant account provider.
Wherever you get your internet merchant account, you will have to also purchase the internet gateway service. The gateway verifies information, transfers requests and authorizes credit cards in real-time.
Debit Cards
The debit card is the preferred method of payment for 33% of Canadians. There are more than 35 million debit cards in circulation in Canada, according to the Interac Association. Every year, Canadians make more than three billion Interac Direct Payment transactions worth hundreds of billions, and the number of debit card payments grows about 5% every year in Canada.
Interac Online is one option that allows your customers to pay for goods and services online directly from their bank accounts. It’s convenient and secure for customers because they don’t have to share any of their card numbers or financial details when making a purchase; payment is completed through their own financial institutions.
To start offering Interac on your website, you have to go through one of their certified acquirers or online payment service providers, such as Beanstream, Moneris, Internet Secure or PsiGate.
Apple, Google, and Samsung Pay
Apple, Google, Samsung all offer payment options through devices that have their operating systems on them. iPhones and Android phones have the ability to link payment methods to most credit and debit card providers.
A device called a contactless payment reader readers accepts connections from your customer’s devices and initiates the transaction.
PayPal, Etc.
PayPal provides an all-in-one online payment solution that does not require a merchant account. The Website Payments Standard program lets you accept Visa, MasterCard, Discover, and American Express credit card payments as well as bank transfers and offer PayPal as well — with no monthly fees, setup or cancellation fees.
Other payment providers are popping up all the time, offering services similar to PayPal. Due, Dwolla, and WePay are among the list of numerous digital transaction providers. You’ll have to keep abreast of your customer base to be sure you accept the methods they want to use.
Offline Payment Options
Some of your potential customers are people who aren’t comfortable with online options, or they are people who want to talk to a live person. If you want to fully monetize your website and make all the sales that you can, it’s important that you give these people ways to pay as well. Include a toll-free number or an order form that customers can fill out and email or send through regular mail if they prefer.
The More Payment Options, the Better
The success of your online business depends on sales. With the possibility of one customer paying with a watch, the next with a card, and a third with a check, you should offer as many payment options as you can.
A mix of all the options available will help you keep customers on your e-commerce site, or in your store because they can pay the way they want to. If you don’t offer a service for someone to pay their way, the possibility of losing that customer is high.
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Learn More about BridgerPay
BridgerPay is a payments operations platform that uses one API, customizable checkout, and a single admin interface to allow your business to integrate with any Payment Service Provider you want. BridgerPay offers fast, on-demand connectivity to any payment method worldwide. Our drag and drop interface gives you complete control over your payment experience. We empower your business to scale faster by simplifying how you manage payments.
European e-commerce insights
With e-commerce enjoying growth in Europe, we analyse the primary factors behind this expansion. We explain which markets on the Continent offer the best opportunities to international merchants, and look at the factors behind the rise of mobile commerce — the main driver of this growth. And we examine payment trends, including the dominance of cards and the rise of digital wallets.
To help our clients locate, attract and keep their customers, we have tracked and assessed e-commerce developments in 34 mature and emerging markets around the globe.
Europe’s high-growth markets present e-commerce opportunities
E-commerce growth as a whole across the European region remains strong. It is slowing slightly in more mature markets such as the United Kingdom, France and Germany. However, a number of smaller markets present compelling opportunities. Of the 18 European countries we examined, 10 are projected to enjoy double-digit e-commerce market expansion between now and 2021, with the Czech Republic (16 percent),1 Italy (14 percent)2 and Spain (13.5 percent)3 ranking highest for predicted growth.
Mobile-commerce is the main driver of growth, far outstripping the overall e-commerce market. In the UK and the Czech Republic, mobile devices are now the primary way to spend online. Similarly, Ireland,4 Norway5 and Sweden6 also stand out as key adopters of smartphone-based payments.
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Cards still a priority, as other payment methods gain ground
When it comes to online purchases, cards continue to represent the primary payment method across the majority of the European markets we surveyed: in 11 out of the 18 countries we assessed, cards are the number one payment method. Card use is particularly strong in wealthy, digitally advanced countries with high bank penetration. At present, card payments are highest in Denmark (63.4 percent of e-commerce payments),20 Ireland (60 percent)21 and the UK (53 percent).22
Given the strong brand recognition of major card payment brands like Visa® and Mastercard®, and advances in online anti-fraud technology such as 3D Secure, we expect cards to remain an essential part of the payments landscape in the near future. In almost all markets, consumers will have at least one card in their pocket and so merchants can benefit by optimizing their card payment processes.
Although bank transfers are not used widely across the continent, interestingly, they are actually the primary payment method in certain countries, like Finland, Switzerland and the Netherlands.23, 24 Open invoicing, where purchases are paid for once they have been received, is still prevalent in some countries. In Germany, open invoicing and direct debit payments account for 40 percent of online sales — a drop of just one percent on the previous year.25
Looking ahead, the Europe-wide rise of subscription services could also drive direct debit payments. Merchants that take recurring payments should also consider direct debit payments, as well as cards, which can also be used. The likes of bank transfers and open invoices, however, would not be suitable for such merchants.
Digital wallets on the rise
Digital wallets have emerged as a key payment option for e-commerce transactions and can help address consumer fears about sharing card details directly with merchants. Advanced e-commerce economies such as the UK and Germany have been fast to adopt digital wallets,26, 27 but smaller e-commerce markets are also embracing this payment method. In Italy, for example, just under one in three online purchases are carried out using digital wallets28 — in the UK, this figure is one in four.29
When considering which payment trends to watch, it is important to understand the underlying payments culture in each of the assessed countries, as well as the operational and business impact that introducing new payment methods might have.
The investment in developing and maintaining a payment solution for a specific country has to be compared against the benefits it can offer. For example, the country in our review with the highest predicted compound ann
ual growth rate, the Czech Republic, may also have some of the biggest hurdles to modernizing its payments landscape.
The Czech market stands out for its high levels of cash usage. Settling payment on delivery with cash is the most popular way to pay in the Czech Republic, representing 45 percent of transactions.30 However, this causes problems for merchants who face delayed payment, as it is received on delivery, and also the additional costs associated with collection.
Rising smartphone use provides huge opportunity
Another overarching theme is the vital importance of mastering smartphone-based payments. As time spent on smartphones increases and app-based payment systems rapidly expand, paying via a mobile device has become commonplace across European markets. This is especially evident in the UK, where mobile devices have become the primary device with which to spend online.31
Denmark is another market that presents particular mobile e-commerce potential, as it has the highest smartphone penetration of all the European countries included in our report series.32
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Regulations continue to shape the e-commerce market
In the coming years, there could be more competition from additional payment methods as the impact of the revised European Payment Services Directive regulation makes itself known.
In the UK, the Open Banking initiative — a UK-only extension of the EU rules — will require major banks to share their current account data in a standardized, secure format with other authorized online organizations.33
Online companies and start-ups will also be able to access the spending data and habits revealed by this initiative, allowing them to create innovative and tailored banking services. As part of the directive, third-party companies will also be able to initiate payments on behalf of customers. By creating a new way for consumers to pay for products, the revised Payment Services Directive will generate a new payments landscape.
This is an exciting development but will take a number of years to come about, due to the very different banking players and processes in each country. An EU-wide payment system is therefore unlikely in the short-term, although there could be some localized or regional schemes.
The introduction of Strong Customer Authentication is also required under the EU directive, making two-factor authentication obligatory for electronic payments. As biometric security options increase on smartphones, mobile commerce could benefit by offering faster and simpler Strong Customer Authentication methods than desktop-based transactions.34
Price-conscious consumers are firmly embracing online discounting
Another key e-commerce trend that must be considered is the prevalence of price discounting. As online shopping becomes a part of everyday life, consumers have become savvier; high use of consumer price-comparison sites before choosing which site to shop with is a feature of many of the countries we have analyzed.
Shoppers are also fully embracing one-off discount events. A growing public familiarity with sales events such as Black Friday and Cyber Monday is translating into one-day and seasonal spikes in spending.
To keep pace, the payments industry must be aware of, and able to cater to, specific country-by-country cultural differences and discounting events. As an example, France stands out as a nation of discerning spenders: 80 percent of shoppers compare prices before buying non-grocery items.35French e-commerce merchants introduced a discounting event called ‘French Days’ in 2018, a version of Black Friday, adding to an occasion and promotions-led online shopping culture there.36
Payment Orchestration in Europe:
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BridgerPay is a payments operations platform that uses one API, customizable checkout, and a single admin interface to allow your business to integrate with any Payment Service Provider you want. BridgerPay offers fast, on-demand connectivity to any payment method worldwide. Our drag and drop interface gives you complete control over your payment experience. We empower your business to scale faster by simplifying how you manage payments.
Payment Service Provider, also known as PSP, Payment Solution Provider or Merchant Services Provider, is a financial entity that is authorized to process transactions between buyers and merchants.
Payment Provider a fast and cost-effective way to accept payments without needing to create your own merchant account and open a company in another country. In a way, a Payment Service Provider, acts as a middleman between a merchant, acquiring banks and card networks involved in the transaction. All you have to do is to sign up with a third-party payment provider, and you can start accepting payments right away.
The scope of PCI DSS is also get reduced when using PSP. With PSP, sensitive data is sent directly from the payer’s browser to the Payment Provider, without actually running through ‘merchants’ servers. PSP usually assumes responsibility for the payments, relieving the merchants of transactional security risks.
Not only does PSP offer reliable payment processing, but it can also help you improve your customers’ payment experience. A PSP can connect you with payment processors from all over the world so you can start accepting the right local paymentsto the region that you are expanding.
How do Payment Service Providers Work?
Let’s take a closer look at how do Payment Service Providers fit into credit card Processing.
The key players involved in online transactions are:
Cardholder
A payee who obtains a card from a card Issuing Bank. The card is provided by an Issuing Bank that works in partnership with Card Networks.
The Card Networks
Credit card networks that facilitate a payment authorization and fund transfers between sellers, customers and their banks.
Merchant
A business that sells products or services. In order to accept credit card payments, merchants use Payment Providers.
Payment Service Providers
Will contact Card Networks and other financial institutions involved in the transaction on merchant’s behalf. The PSP will also arrange for the funds to be placed into the merchant’s account after the transaction is being processed.
How the credit card transaction processing works?
STEP 1
The customer purchases the goods or services from a merchant and pays with his/her card.
STEP 2
The point-of-sale merchant system or gateway software sends the payment information to the Payment Service Providers.
STEP 3
The Payment Service Provider detects the appropriate credit card network and connects to it on the merchant’s behalf.
STEP 4
Card network determines the Issuer and reports the transaction to them.
STEP 5
The Issuing bank checks the legitimacy of the transaction and responds to the network with an approval or denial code.
STEP 6
The network gets back to the PSP with approval/denial information.
STEP 7
The payment processor transfers the approval/denial message to the merchant, and the Payments processor (aka Payment Service Providers) then displays the message.
STEP 8
The funds are being transferred to the merchant’s account.
Even though payment processing sounds like a very elaborate and time-consuming operation, the entire transaction approval process takes mere seconds. This is how advanced modern payment systems are.
What is the Difference Between a Payment Service Provider and a Payment Gateway?
Even though Payment Service Providers and payment gateways are both essential links in the card processing chain, they are completely different things.
In the simplest terms, a payment gateway is a mechanism behind credit card transactions between a merchant and its customers. In other words, it is what assures security and facility sending credit card information from the merchant’s website to the payment processor. When the payment information is entered, the payment gateway then connects to the PSP to get the transaction processed.
Payment Service Provider, on the other hand, is a financial institution that facilitates the transaction. It connects merchants to the credit card networks directly or with payment processors in order to process the payment.
How to Choose the Best Payment Service Provider?
Payment Service Providers are hands down one of the most important links in the chain of online payments. With hundreds of PSP providers to choose from, how do you pick the one that’s best for your business?
Here are the key considerations when choosing the best payment provider:
PCI Compliance
When deciding between several Payment Service Providers, always go with the one that is PCI compliant. It will help to reduce your PCI compliance scope and save you a lot of time and money.
Software Compatibility
Software compatibility is another important consideration when selecting a Payment Service Provider. That said, try going with the service that is compatible with the CRM system and other software that you already have in place. This will enable smoother operation and enhanced payment experience.
Fraud Protection
When choosing your Payment Processor, seek out one that has placed high importance on security and fraud prevention. Strong PSP will have tools in place that will help to combat the fraud and identify the fraudulent transaction before the request has even been transferred to a credit card company.
Here you have it, Payment Service Providers Explained. Choosing the right PSP can mean the difference between a successful transaction and a failed one. We hope we have armed you with enough information to find a service that is both reliable and is aligned with your business objectives!
Payment Operation
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