Understanding Online Payment Services: The Complete Guide - ProPay Solutions
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Understanding Online Payment Services: The Complete Guide

Understanding Online Payment Services: The Complete Guide

If your business has started to do well, you’ve probably come across a few hurdles regarding payment. A few years back, you’d be perfectly okay, the market not acquiring any more out of you than you’ve already been providing. But a changing world results in a changing payment method; as we moved from coins to cards, we’re moving to online payment services, specifically for businesses.

You can blame the technological revolution that headed our way at the end of the 20th century, and the beginning of the 21st century. Everything has transformed itself into an online counterpart, businesses included, you probably already have an online website. It’s become such a necessity, that without one you cannot expect your business to expand or grow to it’s potential. In other news, we have an entire industry dedicated to this online world. So, it shouldn’t come as a surprise that online transactions are becoming a norm as well as a requirement by the public.

But there are other advantages to adhering to such a norm than just following a trend.

Quick transactions: a process spanning around a few minutes, or even seconds if your internet connection is fast enough, an online payment is efficiently quick. Comparing that to tedious and slow manual transaction, with its wasted time on unnecessary travel or expenses, it seems much more desirable, doesn’t it?
Comfortable: Due to its slow but steady influence on the public, most of your customers will actually prefer online transactions, dubbing it a safer and more comfortable form of payment, with 30% of US e-commerce being through the mobile, in 2015.
Safer for you: connecting this to the speed of the transaction, you’re much more likely to find out if your customer has sufficient funds to pay you earlier rather than later, when the check bounces a few days down the line.
These advantages are worth far more than the one cost that you’ll be charged with: a fee for each transaction, to your payment provider, either setup earlier, or a monthly version.

Now, to explain just how average online payments work, let’s follow a hypothetical transaction from start to finish.

1. Requirements ahead of the transaction
There are a few things you’ll require before you even begin the transactional process:
Your own Merchant account: you’ll have to make one through a service provider. Such an account helps in verifying the bank account of the visitor for sufficient funds, and then providing a bridge between both the customer’s account and your own account if there are sufficient funds. If the customer doesn’t have enough credit or debit to process the payment, the transaction is cancelled.
A webpage with a linked button: your website needs to have a button that can redirect the individual to start off with the payment procedure. You’ll be provided with a code from the service provider.
2. Online Payment Form
Let’s speak hypothetically, here a customer, while viewing your website online, comes across a product online that they would like to purchase. They notice a button below the product tagged ‘Buy’, with the price provided next to the product’s description. They then click on the button. This redirects them to an online form that displays the information required for them to purchase the item.
The information highlighted here will be what your payment service requires to cross-check with the customer’s bank, while depositing the exact amount to your own merchant account. Information such as your credit/debit card details, and information required to follow through with the delivery of the item, such as shipping address.
3. Payment Gateways and Processors.
Once the form has been filled and submitted, your payment service provider will verify this information through a secured process, either through their own or an outsourced system, to check if the customer has valid funds.
Here, the information is first processed through a payment gateway, that’ll specifically direct the order to the right payment processor situated in either the bank or the company itself. This processor will check the bank for sufficient funds regarding the information provided by the customer.
If the customer does have sufficient funds allocated in his/her account, the funds are transferred right away. If not, the status is sent back to the payment gateway, that’ll in turn deliver the information onto the server, displaying a failed transaction status on the website. No funds will be transferred in case of this situation.



You’ll need to go through a few requirements for setting up such a merchant account.


  • Be a consenting adult, at least 18 years of age
  • Have a separate bank account for your business
  • Not be a prohibited business
  • Incorporated in a country supported by the payment service provider

This is our guide to understanding how online transactions work. Do let us know what you thought of our article, including any questions you might have, in the comment section below.

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