Receiving payments is probably the most crucial aspect of running a business online! Online payment methods are the ways that your customers can pay for your goods and services. It is important to choose what payment methods you will offer when you start your business and review it regularly to see if you are keeping up with your customer's payment preferences and if you are meeting the needs of your business and customers.
Although it’s a quick and easy action for the customer to pay online, it’s a complex multi-step process for the money to be moved from the client’s credit card to your business bank account. Online payment is very similar to the process that happens in physical stores. The main difference is that customers don’t have to use a physical card terminal to swipe their card. Instead, they use an online form on a secure webpage. After a customer makes an order using an online form, the merchant will transmit the information for the order to a payment processing company over the Internet. Payment processing company stays between the customer and the merchant and processes this transaction. Hence, merchants need to have an account with such a payment processing company. This merchant account is a special kind of account with the payment processing company used exclusively to hold funds received from online transactions. Funds accumulated in your merchant account are transferred to your bank account on a regular basis.
Many banks offer merchant accounts which are directly linked to a bank account so that business owners do not have to use such a payment processing company. In those cases, banks are actually the payment processing companies. You need to check with your bank if they offer such a service for your bank account. They should also provide you with technical documentation on how the web integration should be done so that you can accept payments on your website using your bank merchant account. Some of the most popular payment processing companies are PayPal, Stripe, Skrill, 2checkout, Worldpay... See a list of companies that we work with here.
Step by step
So being a business owner, you have a website where customers pay for your products and services. What happens is as follows:
Clients come to your website and select the product/service they need to pay for
- The client chooses a method of payment they need to use, e.g., the payment processing company they will pay through PayPal, Stripe, ….
- The client uses their credit card (or payment processing account) to transfer money from it to your merchant account
- The money is now into your merchant account, e.g., in your PayPal account
- You can move the funds from your merchant account to your bank account
And this is how clients’ money go to your bank account. Like said earlier, you may use a bank which offers a merchant account. In that case, you will skip step 4 as the money will go directly to your bank account in step 3. With VEVS you can choose from nine of the most popular payment processing companies in the world. All you need to do is to register an account with one of these companies and configure your website to accept payments. If you use another payment processing company contact us to discuss how we can integrate it into your website.
Fees
In each payment transaction involving credit cards, payment processing companies charge a processing fee which takes a bite out of the total profits. We generally see credit card processing fees stretch anywhere from 2.25% – 3.70% or higher. So if a customer pays you $100, then $2.25 to $3.70 will go to the payment processing company, and you will get the rest - $96.30 - $97.75. Remember, that being a merchant, you pay these fees, and not the client so calculate them in the prices you sell your product/service for. With your VEVS website, you will not pay any other fees. We do not collect payment transaction fees!
Risks & Security
Online payments present unique challenges compared to physical in-store payments. Because a physical card isn’t required, and the customer’s identity can be hidden, the chance of facing fraud is higher. Such a fraudulent transaction will most likely result in a Chargeback. It’s important to monitor your payments to predict the possibility of the risk.
Strategies to minimize chargebacks
- Beware of unusual transaction activity
- Communicate with your customers - Try to resolve a dispute directly with a customer before they consider disputing the charge with their bank.
- Accurate Statement Description - Ensure that your Service Provider allows you to accurately set what appears on your customer's bank statements.
- Proof of purchase and delivery
- Be timely in response to chargebacks
As all transactions are handled by a payment processing company, we at VEVS, do not store credit card details for your customers. However, as there is a communication between your website and the payment processing company we advise you to use an SSL (HTTPS) on your website so that this communication is fully secured. This will also make your customers a bit safer when paying for your products/services.
With VEVS you also have the option to select offline payment methods - Bank or Cash. This means that the payments are made manually by the client either in cash or via bank transfer to you by hand or respectfully to your company bank account. No money is transferred electronically via your website!
Don’t waste time anymore, create a business website with VEVS and start accepting payments online!
