What are Payment Processing Solutions?
Payment processing solutions are systems where service providers provide the processes through which payments can be made. In commerce, it is vital that if the business is going to be successful, there must be a sound and smooth method of processing payments involved. The process may appear simple but it includes several parties, as well as the finer details in taking a determined number of steps in the process to achieve the final payment.
The parties typically included in a payment processing system include the merchant or business, the customer, the payment processor, the bank for the customer, as well as the bank for the merchant.
Payment processors are needed to assist with the transaction where the service of using a credit card or debit card is necessary for the transaction to be processed. They are involved in all transactions where there is no use of paper money to perform the transaction. Payment processors will be involved with all the parties to ensure that the transaction is authenticated and processed in the manner desired.
These are companies that act as the middle man between all parties and synthesize the transaction to move the money from the customer to the merchant and are vital to the financial processing chain. The payment processor controls the flow of the information and data between all parties, also ensuring the bank from which and to which the money is moving indeed releases or receives the money.
What is the Process?
The process involved includes the funding, authorisation, and settling of the transaction that is taking place. Once the merchant’s point of sale sends a message to the payment processor that a payment is being performed, there are several steps that the payment processor must take to authorise and process the payment, the first being that the payment is presented to the card association connected to the issuing bank, where the issuing bank will either accept or decline the request made, in line with certain criteria stipulated by the bank for that particular transaction.
After this, the issuing bank will then notify the merchant’s bank of the acceptance or rejection of the transaction, who in turn then notifies the merchant of the outcome.
With the authorisation is then the settling of the funds and the transfer of the cash from the customer’s bank into the merchant’s bank. In this step, the merchant will send an authorisation request to the payment processor who will then communicate with the card company. The card company associated with the issuing bank then sends the authorisation request, where the issuing bank then receives all the transaction information and attends to perform the cash flow transaction.
Here the issuing bank will charge a transaction fee on the specific transaction, then transfer the sale amount to the merchant bank, after deducting the transaction fee, after which the merchant bank will then receive the funds and the funds will then be transferred to the merchant’s specific bank account.
Important considerations when choosing a payment processor include the pricing package, flexibility in the transaction, fraud risk management, great customer service, the ability to assist the business in growth, and whether the payment processor offers a range of processing options, the more being the better.
The most frequent types of payment processing used are the credit or debit card facility, bank transfers as well as eWallets. With credit and debit card facilities, the card details are presented by the buyer to the payment processing company for the transaction to take place. In the case of the eWallet service, the customer will register their cards for this transaction as part of the service offered by the bank, allowing money to be moved without the use of an actual card, but rather with the party’s particulars. In the case of bank transfers, this method is performed by online banking where the customer has to specifically authorise the payment themselves.
Payment processors are a vital part of the chain in any financial industry. A reputable company, such as ACPAS, is there to assist you with all your payment processing solutions and to ensure the smooth running of your transactions.
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