A nice benefit of a complete online registration software solution is being able to accept online payment. Setting up such monetary transactions can also be a source of great trepidation, especially for those new to the process, the technology and the terminology.
Relax. It isn’t brain surgery, and thus far, e-commerce has proven to be as secure and reliable as any other commerce. To provide some additional comfort, this blog will attempt to demystify the key components of online payment.
There are typically four key pieces to any online transaction from the seller’s perspective: the website credit card form, a payment gateway, a merchant account and your bank account. We break each down below, although its important to note that while the order listed isn't essential, each component must be in place for the process to work.
1. Create the online payment form
If you are an ABC Signup customer, you will create that registration/payment form using our software. Other e-commerce-enabled sites use any of hundreds of tools to build and integrate such forms, often seen at the "checkout" phase of e-commerce. Your customers complete these forms with their personal data and credit card information to initiate the transaction.
2. Integrate with a payment gateway
The encrypted payment data collected from the forms then is passed on through the Internet to a payment gateway, which provides a secure connection between your online “shop” (and its form) and your merchant account. It can get somewhat confusing here, because some payment gateways are packaged with a merchant account (e.g., PayPal) so that you only have one setup point for both. Bottom line: you will need to select a payment gateway and merchant account – or a combination – and pay a fee to use their services.
3. Set up or enable your merchant account
Your merchant account is simply an account with a bank or a third party payment processor that allows you to process credit cards online. There are a number of options in setting up a merchant account, but individuals can typically call their organization’s bank and set up such an account that connects to your gateway.
When you are processing online payment, the payment gateway will pass on approved transactions to your merchant account for processing. Your merchant account then begins the process of moving funds from cardholder (customer) accounts into the merchant account.
4. Have a bank account tied to the merchant account
Usually within 24 to 48 hours after the online transaction is initiated, the money is then transferred from the merchant account to your bank account, minus a merchant account transaction fee. At that point, the transaction has been settled.
That's a basic description of the process. If you are a visual person, this graphic will give you a neat overview (note: they add steps to cover credit card issuer and bank approvals and delivery of the goods to the buyer). A glossary of terms at the bottom of this article should provide additional clarity.
If you have questions about online payment, registration software or ABC Signup, please contact us by e-mail or phone (866.791.8268).