How The Choice Of A Payment Gateway Service May Decide Your Success in Ecommerce

As a business owner and particularly an e-commerce vendor, you must know how money gets transferred from your customer to you. Payment processing involves two phases and these phases include the authorization phase in which the sale is approved and the settlement phase where in the money gets transferred to your account.




How A Transaction Takes Place

Let's go through the entire procedure of how a transaction takes place:

1. A shopper visits your site and purchases an item on it using a plastic card.
2. The information is transferred through the payment gateway, where it is encrypted and transferred again to the payment processor maintaining extreme privacy.
3. Your payment processor sends this information to the issuing bank along with an instruction to release the payment in order to complete the transaction.
4. The issuing bank can either approve or reject the request.
5. In case it's approved, your payment processor confirms the transaction and instructs your merchant bank to transfer the money to your account.

This sounds like too much work -- a flow diagram of too many activities, but in fact the entire procedure takes not more than one or two seconds.

The settlement part is the last and final part of the entire payment transfer process and you get paid at this stage.

The issuing bank will release the money, which gets transferred to your merchant bank first and in turn credits this money into your account.

What is Important?

Now you have the funds available in your account. Your merchant bank reserves the right to keep a part of the money transferred, which you cannot use. This is done to safeguard the interest of the customers in case they are not satisfied with the product and decide to return it.

Choose The Right Payment Gateway

In that case, the entire money has to be returned to the customer by your E-Commerce company. The entire settlement process might take a few days. This way, your selection of a payment gateway service is extremely important because it decides how a transaction is conducted on your website. It also affects the entire sales procedure, wherein you offer additional transparency and a better experience to your customer.

It also involves the role of technology in the entire process. If technology used is not able to support these operations in a timely manner, it would reflect badly on the entire customer experience. Your brand loyalty may go down and your revenues might get hit in a big way. No wonder, most of the business coaches and consultants say that customer experience is a crucial part of the success of your eCommerce venture.

Your failure to provide good customer experience may ultimately backfire on you and sabotage all your efforts to increase your revenues and grow your brand.