What Is Payment Processing?
Have you ever bought anything electronically? Made a purchase off a website? If you have at any point participated in an electronic transaction, chances are you’ve interacted with a payment processing system. Payment processors enable the movement of funds from the buyer to the seller in ecommerce transactions. How do they work? What are the different methods for payment processing? Here’s a short primer on the process of making online payments.
First, how do payment processors work? A payment processor is a third party payment management system that allows businesses to take and organize payments for goods and services offered in electronic transactions. For instance, if you make a purchase on a large website like Amazon, your money will be managed and deposited to Amazon via a payment processing company. If you pay with a credit card at a grocery store, your money goes through payment processing. This way stores can focus on their customers and retail and can leave the money management to a 3rd party.
What are the different methods for payment processing? If you ever use a debit or credit card, you are interacting with one of the largest forms of payment processing. Online services like PayPal and Square are other methods. These systems allow you to pay using a direct link to your bank accounts. Credit card payment applications that allow you to use your smartphone to receive payments are growing in popularity. Now venues that used to only accept cash can open their sales to customers who want to pay with cards. Payment processing systems have opened up a whole new method for making transactions that wasn’t possible 20 years ago.
Payment processing systems keep businesses running. They enable large companies to outsource their payments so they can focus on customers and services. Credit card companies and online payment processors in turn make a profit for their services by taking a small percentage of the total transaction for their role in managing it. Our society used to be cash- and-carry only. Now we have a myriad of choices when it comes to payment options for our transactions. If you’re headed to a local farmer’s market, you may be surprised how many vendors now take cards and other types of electronic payment processors. In fact, so many businesses take payment processors now, be they hot dog vendors or large retail stores, that it seems odd if a business doesn’t take cards or online payments.
Source by David I Marquez