Everything you need to know about online payment services
Online payment terminology There are several terms that are used almost interchangeably when describing online payments: Payment gateway: A service that receives the online payment request from your website and directs it to the payment processor. Payment processor: A service that enables Merchants to receive debit or Credit Card payments online by providing a connection to…
Online payment terminology
There are several terms that are used almost interchangeably when describing online payments:
Payment gateway: A service that receives the online payment request from your website and directs it to the payment processor.
Payment processor: A service that enables Merchants to receive debit or Credit Card payments online by providing a connection to an Acquiring Bank. These processors perform many functions such as evaluating whether transactions are valid and approved. If the customer has sufficient funds, the transaction is authorized, the funds are transferred from the customerโs account, and your website is notified.
Payment provider: A payment provider (or payment service provider) is the company that operates the payment gateway or payment processor services. In some cases, the payment gateway and payment processor are combined into a single service known by either name.
Payment service or payment system: Where a payment provider offers multiple types of payment gateways โ with different features and pricing โ each type is referred to as a payment service or payment system. For example, Payoneer is a payment service provider that offers a number of payment services such as US Payment Service and Withdraw to Bank Service.
Merchant account: When an online transaction is successfully completed, the funds are transferred from the purchaserโs account to your merchant account, a special kind of bank account used exclusively to hold funds received from credit and debit card transactions. To accept online payments, you usually need to set up a merchant account with your payment provider. Funds accumulating in your merchant account are transferred to your organizationโs bank account on a regular basis.
Getting started with online payments
- A merchant account, though some payment systems do not require a merchant account or can provide you with one
- An account with a payment service provider
- A web page with a call to action button, which initiates the transaction process (Join, Donate, Buy)
The transaction process
Once you’ve set up your web page and connected it to an online payment service, visitors to your site will be able to pay online for products or services. The online payment process begins when the visitor clicks the button to purchase somethingย from your website/ online store. Theย visitor enters their credit card information then submits the transaction request.
The Merchant Bank’s Processor submits the transaction to the credit card network (like Visa or Mastercard). The credit card network routes the transaction to the bank that issued the credit card to the customer. The issuing bank approves or declines the transaction based on the customer’s available funds and passes the transaction results back to the credit card network.The credit card network relays the transaction results to the merchant bank’s processor. The processor relays the transaction results to Authorize.Net.
The transaction request, along with the credit card information, is securely transmitted to the payment gateway operated by your payment service provider. No one โ including you โ can view the purchaserโs personal and financial information.
Your payment service provider will verify the purchaserโs credit card details and confirm whether the purchaser has sufficient funds to complete the transaction.If the purchaserโs credentials are valid and there are sufficient funds, your payment service provider will transfer funds from the purchaserโs bank account to the merchant account associated with your website, and notify your website that the transaction has been approved. If the transaction is declined, no funds will be transferred and you will be notified.
Factors to consider when choosing a payment processor
Do they support organizations located in your country?
Do they support the currencies you want to accept?
What volume of transactions do you expect on your website?
Are payments processed on your website or theirs? Do you care?
What kind of payments do they accept โ credit card, debit card, PayPal?
Do they support recurring payments?
What kind of fees do they charge?
- application fee
- setup fee
- monthly fee
- discount rate
- per-transaction fee
- statement fee
- monthly minimums
- non-qualified fees
- cross-border fees
- gateway fee
- minimum term contracts that you cannot cancel without penalties
- chargebacks
- rolling reserves.
A few payment processors to consider
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Disclaimer
Nothing herein should be construed as if Payoneer Inc. or its affiliates are soliciting or inviting any person outside the jurisdiction where it operates/is licensed to engage in payment services provided by Payoneer Inc. or its affiliates, unless permitted by applicable laws. Any products/services availability are subject to customerโs eligibility. Not all products/services are available in all jurisdictions in the same manner. Depending on your eligibility, you may be offered with the Corporate Purchasing Mastercard, issued by First Century Bank, N.A., under a license by Mastercardยฎ and provided to you by Payoneer Inc., or the Payoneer Business Premium Debit Mastercardยฎ, issued and provided from Ireland by Payoneer Europe Limited under a license by Mastercard. The Payoneer Business Premium Debit Mastercardยฎ cannot be used at merchants or ATMs in Hong Kong or for HKD payments. If you are located in the EEA, all Payoneer Services will be provided to you by Payoneer Europe Limited, trading as Payoneer and regulated by the Central Bank of Ireland.
The information in this document is intended to be of a general nature and does not constitute legal advice. While we have endeavored to ensure that the information is up to date and correct, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability or suitability of the information. In no event will we be liable for any loss or damage including without limitation, indirect or consequential loss or damage, or any loss or damage whatsoever incurred in connection with the information provided.
