Earth Skater Internet Marketing
Articles
Merchant Processing 102
Shopping Carts, Gateways and Payment Processors: Anatomy of an Online
Purchase
By Erin
Kroll, PR/VAR Marketing Coordinator
e-onlinedata
Years
ago, an exchange of cash was all it took for a customer to make a purchase
from a merchant. How things have changed! Today, most businesses offer their
products or services on the Internet — clearly, they can’t be restricted to
cash-on-delivery practices anymore. E-commerce has emerged as a lucrative
channel for merchants to boost sales and grow their bottom lines. Many
consumers have Internet access both at work and at home, and browsing an
online catalog can be faster than browsing the aisles of a physical store —
and customers get the added convenience of shopping 24 hours a day, seven
days a week.
Merchants
should understand the value of operating in multiple channels. For those who
haven’t yet incorporated e-commerce into their business but want to, there
is much to learn. They must educate themselves on how payment processing
works in order to best accommodate their online shoppers and serve the needs
of their business. Though paying for an online purchase takes just a few
seconds, it involves a complex chain reaction of behind-the-scenes
processes.
Merchants can increase revenues and reach more customers by offering an
efficient, successful e-commerce solution. This article examines what must
be in place in order to complete a transaction that is both secure and
offers superior customer service.
What
Makes an E-Commerce Solution Possible?
In
addition to the range of software and hardware that companies use to support
the sale of products and services online, there are three vital components
that make online shopping possible: the shopping cart, payment gateway and
payment processor. Each is critical to ensuring successful implementation of
e-commerce functionality.
·
Shopping
cart. The
shopping cart acts quite literally as a virtual shopping basket. It holds
the items customers select from a Web site until they are ready to proceed
to the checkout stage, where their credit card information will be
processed. The shopping cart:
o
Keeps track of
items until they are purchased
o
Automatically
totals the amount of a customer’s order, including shipping and tax
o
Allows
shoppers to securely enter address and credit card information
·
Payment
gateway. In order
to accept credit cards through the Internet, a payment gateway is critical
to transport the credit card information from the shopping cart to the
payment processor once the consumer clicks the “Buy” button. In most cases,
this transaction happens almost instantaneously. The payment gateway
receives encrypted transactions from the merchant’s shopping cart. An
encrypted transaction simply means that credit card numbers can’t be read by
people who are not supposed to read those numbers. Authentication is then
provided and the decrypted payment information is transmitted for
authorization. The payment gateway:
o
Fulfills the
same function as a point-of-sale (card swipe) terminal at a physical retail
location
o
Takes
information provided through a shopping cart and transmits it electronically
and securely to a payment processor to be routed for authorization of
payment
.·
Payment
processor. The
payment processor transmits a customer’s credit card information via the
Internet to the merchant bank for authorization. It also sends data back to
the merchant’s bank to approve payment or the transfer of funds.
Specifically, a payment processor:
o
Acts as a link
from the merchant to the acquiring bank or merchant bank
o
Receives
information from the merchant through the payment gateway and packages the
information for delivery to the acquirer, ensuring that all necessary
transactional data is present and valid
o
Later
transmits information back from the acquirer for delivery to the merchant to
settle the transaction
With
the shopping cart, payment gateway and payment processor in place, merchants
have all they need to offer convenient e-commerce solutions that deliver
superior security and service. With a little research and education,
merchants can find the best providers to accommodate their business needs
and those of their consumers. It just makes sense — with online shopping
projected to account for $116 billion, or five percent of all retail sales
this year — e-commerce provides merchants an opportunity to make more money
and succeed in an increasingly competitive marketplace.
Call 877-627-2492 to discuss your website plan
today.
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