Banks are still at the core of the payment processing systems, which is largely responsible for settling of accounts of credit card or wire transactions, and other aspects of the transfer of funds in exchange for goods and services. The process is changing rapidly as other institutions have become involved in the payment process, and banks no longer have the monopoly that they once did.
The payment processing systems usually involve a series of complex transactions, with more than two parties. During credit card transactions, the payment processor will be contracted by the merchant, to assist in processing the transaction on behalf of the banks that acquire the credit. There are two types of processors, and they operate at either the front or back end of the process.
Front-end processors will normally be connected to the card issuer and would be involved in the authorization and settlement of the transactions. The processors that operate at the back-end would be involved in accepting the settlements, and transferring the credit amounts to the merchant bank from the bank that issues the credit.
To facilitate the process, a merchant account is needed. Real-time online payment processing provides rapid and secure ways for merchants to be paid for their goods or services. The almost instantaneous methods offer some protection from fraudulent purchases as verification is necessary before the transaction is completed.
Online payment processing, benefits, not only the merchants, who receive almost immediate payment for the goods or services that they offer, but it gives the customers the convenience of making immediate payments. Perhaps the most popular medium for transferring the payments is with the use of credit cards, and without a way of accepting credit card payments, the merchant may be a doomed failure.
One of the biggest benefits of online payment processing is derived from the ability to keep track of the different types of payments. With a reliable merchant account, you can easily gain access to processes such as automated payments and recurring billing, which can all be used to increase the profitability of your business, as customers can grow to appreciate the convenience.
Online payment processing is now at the heart of e-commerce, as it offers consumers the convenience of a fast and secure method to pay for purchases with a debit or credit card. It also helps merchants by efficiently handling a large volume of transactions. The process may appear instantaneous, but it involves some different transactions.
The payment processor will request verification of the validity of the card, from the bank that issued the card. When verification has been confirmed, the details are then sent to the merchant through the payment gateway. The merchant is then obligated to complete the process. If verification is denied, the merchant is also informed, where the transaction will be denied. Because payments are processed at a much faster rate, the merchant will now have a much-improved cash flow, with which she can manage her business.
Secure payment processing can be one of the methods that merchants use to increase profitability. Because online payment processing offers more variety in accepting payments, the likelihood of receiving an increase in sales also increases