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A card in a payment kiosk with a green check on the screen when the payment goes through a payment processing service and a mobile phone beside it.

Payment Processing Services: How They Benefit Your Business

Payment Processing Services: How They Benefit Your Business

Behind every successful business are gateway payment services. Payment processors ensure that transactions are carried out quickly and make the customer experience more manageable. Although a credit card transaction can seem simple, it is a more complicated process involving payment gateways, the customer’s bank, and the merchant’s account. All this communication happens in mere seconds. 

A hand extending through a kiosk holding a credit card to another kiosk holding a bag of goods to show the quick process of payment processing.

What Are Payment Processing Services?

Payment processing services are services that collaborate with all parties involved with the payment process to make it simple for customers to make purchases. Businesses that take payment options such as credit or debit cards need a payment processor. They ensure that merchants receive their money from any transaction that doesn’t involve paper money. Payment processing services validate the customer’s information and send the funds to the merchant. 

How Does Payment Processing Happen?

The payment processing happens through authorization, funding, and settling a purchase. When a customer purchases something from a merchant, the payment is made with a card. The merchant then sends a request to the payment processing systems for authorization of the purchase, and the payment processing systems complete the following steps:

  • The payment gateway service submits the purchase to the issuing bank associated with the customer’s card.
  • The issuing bank accepts or rejects the purchase.
  • The issuing bank sends an approval or rejection status to the merchant and their bank.

After the authorization process is completed, the process of settling the funding begins. This occurs when the purchase is sent to the merchant’s bank account. The merchant sends authorization requests to the online payment processing services, which then send the details to the card issuer. The card issuer is connected to the issuing bank, receives details of the purchase, and carries out the process further with the following steps:

  • The issuing bank charges the sum of the purchase to the cardholder.
  • The issuing bank sends the amount to the merchant bank minus any interchange fee.
  • The merchant bank sends the purchase amount to the merchant account.

The Costs Involved In Card Purchases

The word costs with an arrow pointing up written on a chalkboard referencing the costs involved with card purchases.

It costs money to operate networks in which cash flows. Companies that do this type of work, including payment processing services, charge merchants for using their services. The fees of each purchase are collected from the merchant, and the payment processing service takes a cut of the money. The cost is typically 2 or 3 percent of the purchase and includes fees such as:

  • Interchange fees: Interchange fees make up about three-fourths of the total costs during a transaction. Card networks set this rate, and it typically is sent to the card issuing bank. 
  • Assessment fee: An assessment fee is paid to a card network such as Visa or Discover. The amount is a percentage of the gross sales for the month. 
  • Processor fees: Processor fees go straight to the payment processing services.

How To Choose The Best Online Payment Processing Services

For any business that accepts debit cards or credit cards, online payment services are a vital part of the process because they need to receive money that doesn’t come from paper currency. When choosing online payment processing services, keep in mind these essentials: 

  • Excellent customer service
  • Flexibility with purchases
  • Tools to grow your business
  • Fraud risk management
  • Fast payments
  • Excellent customer support
  • Integration with systems
  • International payment options
  • Mobile payment support

Besides these factors, another thing to think about is the fact that not all payment processing systems process all types of purchases. Some can process online payments, and some might specialize in in-store purchases. Ensure that your payment processor accepts all forms of payments that your business needs.

What Types Of Payments Do Payment Gateway Services Process?

Two people holding their phones with money transferring between the two using the customer's preferred payment method. 

With online payment processing services, you can accept a variety of payments, including:

  • Credit Or Debit Cards: Credit and debit cards are the most common forms of payment among customers. In a card transaction, the buyer provides the card details, which are then transferred to the payment processor.
  • E-Wallet: E-wallets are another form of payment that can be accepted. Customers sign up for the e-wallet with their bank account or credit card. Paypal and Apple Pay are considered e-wallets. 
  • Bank Transfer: Bank transfer is another payment option that gives the customer complete control over the purchase because they have to authorize the purchase themselves.

The Benefits Of Using A Payment Gateway Service

There are several benefits to using a payment gateway service, including:

  • Several Payment Options: Payment gateway services give businesses an easy way to accept credit and debit cards as payment. Providing these convenient payment methods can enhance customer experience and increase customer loyalty because they want to pay for your product or service in a way that is convenient for them. Customers can also use E-wallets and other types of payment services to bring convenience to the customer. 
  • Security: Due to the fact that online payments transfer a lot of sensitive information, it is essential that the process is secure. Without protection, the customer may not feel comfortable sharing their information, which can lead to a loss of business and trust. Payment processing services provide quality security to ensure the safety of the customer’s data. 
  • Flexible: Using a payment gateway can allow you to scale your business effectively. As payment options rapidly change, it’s essential for your business to have the flexibility to grow. Online payment processing services have the latest services in online payment for your business to grow and transform as necessary.
  • Payment Systems Integration: Businesses use many systems to smoothly operate their services. It is crucial that these systems properly integrate with the payment processing services so that the business can continue to run smoothly.
  • Analytics: Working with payment processing services offers the business the ability to access a large amount of data. Payment processors also provide quality analytics tools to analyze data and determine trends. These analytics are beneficial for innovation, planning, and controlling.
  • Save Time: Online payment processing services save the merchant time by being able to take payments in seconds. Regardless of where you are doing business worldwide, you can collect payments easily and quickly.
  • International Payments: Payment processing services give the business the ability to accept worldwide payments in multiple currencies using multiple methods so you can grow your business simply.
  • Providing An Enhanced Customer Experience: A payment gateway service can offer a wider variety of payment options to prevent shopping cart abandonment and improve customer experience. 
  • Reduce Declined Purchases: Declined purchases can be a headache for a business that can produce additional costs. However, with a payment gateway service, they check the fund availability right as the sale occurs to either approve or decline the transaction to prevent these charges.
  • Fraud Detection: Payment processing systems protect the customer’s information and deal with chargebacks. They also prevent fraud by using PCI-DSS compliance and data encryption.
  • Fast Cash Flow: Most online payment processing services credit the merchant account within 2 to 3 days of purchase, so you don’t have to wait so long before getting the cash for a purchase.
  • Automation: Online payment processing services reduce the need for humans in the payment process. It also minimizes human error. The payment processor allows you to set up automatic withdrawals and recurring payouts for bills.
  • Excellent Support: The best gateway payment services provide reliable support. If you ever have a problem with a purchase, you can contact them immediately for help. Excellent customer support can help you with setting up your account, providing business advice, and resolving any disputes with purchases.

Final Thoughts

Payment processing services are a crucial part of doing business, primarily if the company collects non-paper transactions. Gateway payment services allow customers to share their information when making purchases securely. They also provide convenience for the merchant and the customer to make payments in seconds.

Selecting the right payment gateway service can automate the process of taking payments, increase your cash flow, save you time, prevent fraud, and enhance the customer experience.