The best online payment solutions
By Mariana Almeida Marques
The growth of ecommerce prompted a steep surge in the use of online payment methods. Any product or service customers want to buy, they can purchase it online through a few clicks. What they might be unaware of, is the online payment system working behind the scenes to process their payment.
For ecommerce stores, having an efficient online payment system is paramount. After all, businesses rely on being able to take payments for their services or products. But with an overwhelming amount of information and options online, choosing the right payment solution, or even understanding what this solution does for your business, can be more difficult than expected.
What is an online payment system?
An online payment system is a tool that enables online transactions. If your business takes online payments for goods or services, then it needs an online payment system to process those payments. These payments can be either debit/credit card payments or Direct Debit, and they can be initiated via the company’s website or mobile app.
You can either set up an online payment system yourself and have it in-house, or outsource it to a third-party company that will handle all online transactions for you. Setting up the system in-house means that you will have to integrate the payment gateway, payment processor and merchant account (all the components of a regular online payment system) by yourself, which might be a stressful and lengthy process.
Should you also want to take Direct Debit payments from your customers, you will need to use the Bacs payment scheme in the UK and invest in Bacs-approved software. If you outsource it to an already Bacs-approved PSP, you won’t need to integrate Bacs yourself or apply for your own SUN. You can read more about Bacs payments and how they work here.
Lastly, it is critical that you comply with payment regulations, particularly the PCI DSS standard, if you want to handle all the big card networks like Visa and MasterCard. Usually, payment processors are already PCI-compliant, so this is something to look out for when choosing a PSP for your business.
Elements of an online payment system
Online payment systems are composed of a number of different tools that work together to process transactions. Here are the three main elements:
This is your company’s account, where all the payments are deposited. Once you sign a contract with an Acquiring bank, this bank will open and maintain the account for you.
Gateways take the customers’ card details and transmit them to the payment processor. They serve as a mediator between the Issuing bank (customer’s bank) and payment processor.
PSP (Payment Service Providers) or payment processors work as a middleman between the Issuing bank and Acquiring bank to authorise the transaction (after authenticating the customers’ bank details) and transfer the funds to your merchant account.
Advantages of using an online payment system
Perhaps the most significant advantage for customers is convenience: they can pay anytime and anywhere, without actually having to physically visit a store or to go out of their way to purchase something during business hours. This translates into more opportunities to make sales and more revenue for businesses. It also increases customer satisfaction, and the likelihood of them staying loyal to your company.
Online payment systems also enable more efficient and faster transactions- usually processed within seconds. Speed is crucial to enhance the payment experience for customers, as they don’t want to waste their time unnecessarily when making a payment.
There are increasingly more security tools available to reduce any potential risk of fraud or data breach. As online security has become a more urgent issue to tackle, financial institutions are investing heavily in obtaining strong anti-fraud mechanisms, some of them powered by AI and machine learning. They must also follow strict conduct guidelines, including the PCI DSS standard. Most online payment systems can be considered 100% safe and secure, especially those that are PCI compliant.
What are some of the best online payment systems?
Some online payment systems are known worldwide and have gained an unshakeable reputation. Here are some of the most used and trusted systems:
PayPal is used by more than 220 million people worldwide. It has its own payment gateway, Payflow, and it is best known for offering fast and frictionless transactions with a 61% online checkout conversion rate (comScore study). The main drawback of using PayPal is that there is a higher fee for lower volumes of payments, so it may not be the cheapest option for small businesses.
Square offers some useful monitoring tools and a straightforward platform for merchants to navigate through. The fees are flat for both Card-Present and Card-not-Present transactions, so it might be a better deal for smaller companies. It is best known for its Point-of-Sale infrastructure, which you might see in physical shops.
Previously called Worldpay, FIS Global processes half of the UK’s online payments. It supports over 120 currencies and lets you choose between a pay-as-you-go or fixed monthly plan. Though it offers advanced fraud protection, PCI compliance services have an additional cost.
Shopify provides the whole ecommerce platform for your business and offers integration with 100 payment gateways. The payment plans are divided into three types of memberships: a basic, a regular and an advanced one. There is a flat monthly fee of up to £234.39 (advanced plan) and a fee per transaction.
Others include Stripe, Sage Pay, Braintree and Amazon Pay.
Our online payments solution:
Imburse gives you access to all payment gateways and payment providers worldwide- including all of the ones mentioned above. By connecting to us, you can quickly and easily connect with any provider of your choice. This means that you have a broad range of options to choose from, and the flexibility to change or add new providers depending on customer demand. If you are interested in knowing more, do reach out to us below and our team will be in touch.