A Comprehensive Guide to E-commerce High-Risk Payment Processing

Author : Martina Smith | Published On : 27 Dec 2023

Introduction

The ancient Greek philosopher Heraclitus once said that change is only constant. We witnessed the realism of the cited quote for ourselves. Before the wide spread of the internet, the market existed only offline, but we saw how it changed. Today, almost all businesses have an online presence. It isn't an exaggeration to say that it's hard to survive in a competitive market without an online presence. For instance, global business-to-business (B2B) and business-to-consumer (B2C) e-commerce sales vaulted $26.7 trillion in 2019, which was equal to 30% of the global gross domestic product (GDP) that year. Covid-19 intensified this trend, and days are close when half of the world trade will be made via e-commerce.

As an offline business require some essentials to operate, an online business or e-commerce also requires some necessities. These include the goods or services you want to offer, a website or app and payment processing. In this article, we will explore the payment processing part of e-commerce and guide you on how to acquire the best payment processor.

 

What is E-commerce Payment Processing?

E-commerce payment processing is an umbrella term for many payment solutions involved in completing an online transaction in eCommerce. It consists of several payment solutions, including an e-commerce merchant account, payment gateway, credit card processing, etc. A full-stack payment processor, like WebPays, can provide all payment solutions in a single place, whereas some only provide one or two services. Let's understand these solutions one by one.

(Round-up: A merchant should choose a full-stack payment processor for the best optimisation and better performance.)

 

What is an E-commerce Merchant Account?

An ecommerce merchant account (EMA) is nothing but a simple online bank account that allows merchants to accept and hoard payment from customers. Unlike traditional bank accounts, it accepts payments in multiple payment methods and currencies. It is the first place where customer payments reach. After payment settlement, this payment can be transferred to any regular account.

(Round-up: Banks and traditional financial institutions regard online businesses as high-risk, so they hesitate to provide their payment solutions to them. That is why merchant service providers play a vital role in developing ecommerce by providing payment solutions.)

What is an E-commerce Payment Gateway?

An ecommerce payment gateway plays a role of a road or bridge between your website or application, merchant account, payment processor and card networks. It securely transfers the payment from customer accounts to merchant accounts. Unusual to traditional payment gateways, it allows merchants to accept payments in multiple payment methods, including credit cards, debit cards, prepaid cards, e-wallets, digital currencies and local payment methods. An EMA also enables merchants to accept payment in multiple currencies.

(Round-up: The payment gateway manages currency conversion and settles funds in the preferred currency of merchants. It is also responsible for securing payment during transactions. It can be customised as per merchants' needs.)

 

How Does E-commerce Payment Processing Work?

E-commerce payment processing involves the secure and efficient handling of online transactions between customers and merchants. Let's see how it works:

1. Customer Initiates Purchase: When customers purchase something from your online store, they proceed to the checkout page. Here, they provide necessary details like shipping address, contact information, and payment method.
2. Payment Method Selection: The customer chooses their preferred local or alternative payment methods from the options available, which could include credit/debit cards, digital wallets, bank transfers, or other localized payment options.
3. Transaction Data Encryption: Before transmitting payment information, the gateway encrypts the data to ensure it remains secure during transmission.
4. Authorization Request: The payment gateway forwards the payment details to the customer's bank or card issuer to request authorization for the transaction.
5. Authorization Response: The customer's bank or card issuer reviews the transaction request and determines whether the customer has sufficient funds and if the transaction seems legitimate.
6. Transaction Approved or Declined: Based on the authorization response, the payment gateway informs the merchant whether the transaction is approved or declined.
7. Confirmation to Customer: The customer receives an order confirmation, indicating whether the payment was successful or not.
8. Settlement: If the transaction is approved, the customer's bank or card issuer transfers the funds to the merchant's account, initiating the settlement process.

 

What Features of an E-commerce Payment Processor Must Have?

When you are looking to acquire an eCommerce payment processor, you must look at some crucial features. In this section, we have mentioned the most important factors in choosing an eCommerce payment processing provider. Let's have a glance:

..1.Security:

Best high-risk merchant accounts must prioritize security to protect sensitive financial information and customer data. It should comply with industry standards such as PCI-DSS, GDPR and implement SSL encryption and tokenization to safeguard transactions. It should also provide advanced fraud and chargeback prevention tools to secure merchants from any fraudulent activities.

..2.Multiple Payment Methods:

It should provide credit card processing and support other various payment methods, including digital wallets (e.g., PayPal, Apple Pay, Google Pay), mobile banking (e.g., iDEAL), bank transfers, ACH, e-checks, and other localized payment options to cater to a diverse customer base.

..3.Seamless Integration:

The e-commerce payment platform should be easy to integrate into the eCommerce platform or website. APIs and developer-friendly documentation make the integration process smooth.

..4.Mobile Optimization:

With the rise of mobile commerce, the payment processor should be optimized for mobile devices, providing a seamless and user-friendly payment experience for customers using smartphones and tablets.

..5.Fast and Reliable Transactions:

The payment processing system must be quick and dependable, ensuring that transactions are processed without delays or interruptions.

..6.Recurring Billing and Subscriptions:

For businesses offering subscription services or recurring billing models, the processor should support automated and scheduled payments.

..7.International Support:

If the business operates globally, the best payment processing companies should be able to handle international transactions, support multiple currencies, and adapt to local regulations.

..8.Transparent Pricing:

The payment processor should offer clear and transparent pricing structures with no hidden fees. It should also provide competitive fees without compromising the quality of services.

..9.Customer Support:

There is no limited time zone in e-commerce, so an e-commerce global payment gateway provider should offer round-the-clock customer support. It should provide prompt and helpful assistance to merchants and customers in multiple languages.

..10.Account Management:

Merchants should have access to a user-friendly and powerful dashboard to manage transactions, view sales reports, and handle refunds or disputes.

..11.Scalability:

As the company expands, the payment solution provider should be able to manage growing transaction volumes without sacrificing performance.

By having these features, an eCommerce payment processor can facilitate smooth and secure online transactions, contributing to the success of the eCommerce business and providing a positive experience for customers.

 

Conclusion

In this article, we have understood the importance of e-commerce and its payment processing. We also learned about the merchant account, payment gateway and how it works. Plus, we get the idea of how to acquire the best payment processing company. It is important to have a reliable and trustworthy payment processor in this vast e-commerce market. After analyzing several payment processors, we conclude that WebPays, a full-stack payment solution provider, is an ideal choice for ecommerce merchants. WebPays is a leading and one of the fastest-growing merchant service providers in Europe and nearby territories. It has all the features discussed in the blog and is hungry to incorporate the latest ones. Along with regulated merchants, WebPays provides payment solutions to unregulated merchants. Don’t let payment processing hurdle your success, acquire WebPays and streamline your payment system now. Apply now to get instant approval.

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