Taking Your Business Online (Part 3 of 4): Payment Process

Posted on Nov 29, 2007


This refers to the process of obtaining the money from your customer and transferring it into your account.

Payment processing can be online or offline.

Offline payment processing is recommended for sites with minimal volume of transactions. With offline payment processing, you will be handling your payments manually: depositing a cheque or money-order sent by the client, or manually processing credit card transitions via your Point of Sales (POS) terminal.

Online payment processing is recommended for sites with high volume of transactions. With online payment processing, payment will be taken automatically via an online payment gateway and a merchant account for higher efficiency. With automation, they do not have to manually process or handle transaction payments. When a customer submits their credit card information on your website, the information is then transferred to the payment gateway. The information is then validated and funds transferred directly into your merchant account.

Questions you might have:

  1. What are merchant accounts? Do I need one?
  2. What is a payment gateway? Do I need it?

You do not need a merchant account to do business online. But if you are planning to accept credit card payments on your online store, you will need an online merchant account. You can setup an online merchant account through a Merchant Service Provider (MSP) or through your local bank.

A payment gateway is a service provider that automates the payment transaction between your customer and you. They act as the bridge between your online store and your bank.

To understand how it works (click to enlarge image):

Payment Process

You will need an online merchant account if you would like your customers to be able to pay you in a real-time environment (ie. online) with their credit cards.

If you do not want to accept orders via credit card or you want to accept credit cards but you will be manually processing the payment transactions offline, then you will not need a payment gateway nor an online merchant account.

Next, we’ll examine a few of the shopping carts support on our Doteasy hosting services: PayPal Cart, Zen Cart and Doteasy Commerce.

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