Introduction To Ecommerce
Below is a MRR and PLR article in category Internet Business -> subcategory Ecommerce.
Introduction to Ecommerce
Overview
Navigating the world of ecommerce can be tricky, especially for newcomers. Even those skilled in scripting might set up an online store with a package like OSCommerce, only to find integrating a payment gateway to collect payments challenging. This article provides a straightforward overview of how ecommerce transactions are structured to secure payments, along with tips for selecting the right payment gateways.
Understanding How Payments are Processed
Ecommerce involves facilitating online shopping and securely processing payments. Online store owners need to set up systems that collect payments from buyers and transfer funds to the bank. This requires two key elements: a merchant account and a payment gateway.
How Transactions Work
When a buyer enters their credit card details on a website, the information is securely transmitted to a payment gateway. This gateway collaborates with a payment processor to verify the availability of funds. If funds are present, the transaction is approved, and the gateway notifies the merchant of the successful payment. The funds remain pending until the transaction is settled, at which point they are deposited into the merchant’s bank account.
Merchant Accounts
Merchant accounts are specialized accounts allowing ecommerce transactions without physical card presence. They serve as intermediaries between the payment gateway and the bank account, accepting credit card payments before depositing them into the bank account.
The Risk and Trust Factor
Issuing banks trust that merchants will provide the purchased goods or services. If this trust is broken, customers can dispute transactions, leading to chargebacks. Chargebacks pose a risk to merchant providers, and excessive chargebacks can result in a merchant ending up on the Terminated Merchant File, potentially preventing future merchant account approvals.
Payment Gateways
Payment gateways facilitate online transactions by linking your website to your merchant account. They manage data transfer between your secure order forms and your processing bank, handling transaction approvals and rejections.
Key Features to Look For
When choosing a payment gateway, consider compliance with security standards (CISP, SDP, DISC), availability of a virtual terminal for phone transactions, fraud prevention mechanisms, recurring billing options, integration methods, costs, and e-check acceptance.
Fraud Prevention
Fraud prevention is crucial, as frequent fraudulent transactions lead to chargebacks. Important fraud detection tools include Address Verification (AVS) and CVV2, which verify customer address and card security codes, respectively.
Integration Methods
Most gateways provide guidance on integration. There are two common methods:
1. Redirect Method: Your site sends customer information to the gateway, which handles payment processing. Customers briefly leave your site for payment but return afterward. This simpler setup doesn't require an SSL certificate but involves customer redirection.
2. Direct Method: With an SSL certificate and CURL access, you can host the payment form, allowing seamless transactions without redirecting customers from your site. This setup requires more technical effort but offers a cohesive user experience.
Final Thoughts
By understanding these elements, you can set up an effective ecommerce payment system and choose a suitable payment gateway, making your online business transactions secure and efficient.
You can find the original non-AI version of this article here: Introduction To Ecommerce.
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