If you’re an eCommerce business looking to grow, you need to accept online payments. That means setting up a secure payment funnel that matches your business goals.
Understanding how each step in the online payment process works is critical to optimizing it for your customers. This step-by-step guide provides a basic overview and best practices for accepting online payments.
1. Sign up for a merchant account
Having a merchant account is the first step to take if you want to accept credit and debit card payments. Whether you’re a start-up or an established business, a merchant account can help increase your sales and boost profits.
Essentially, a merchant account is an agreement between your business and a Visa or MasterCard acquiring bank that allows you to process and accept card payments. The acquiring bank then holds the customer’s payment until it’s approved by the customer’s issuing bank and then sends the money to your company’s bank account.
To get started, you’ll need to provide your business ID and any other identifying information that your prospective provider requires. Then, you’ll need to wait for your application to be reviewed.
Once you’re approved, the money will be transferred into your company’s bank account within a couple of days. This is much quicker than individually billing customers and waiting up to 30 days or more to receive payment from them.
2. Add a payment gateway to your website
Adding a payment gateway to your website is the first step in accepting online payments. It’s also an important part of creating a secure online shopping experience for your customers.
A payment gateway is a software program that allows businesses to accept credit and debit cards for online purchases. Using a gateway can help you process payments more quickly and securely than you could on your own.
It can also be easier to manage and control. The payment gateway you choose should support your business model and be scalable to grow with your growth.
The type of payment gateway you use will determine how customers pay on your site, including whether they get redirected away from your site to a hosted platform or directly to your merchant services provider. Hosted gateways can be faster and simpler to integrate with your website, but can be more expensive.
3. Set up recurring payments
Recurring payments are a great way to simplify your billing process and boost customer retention. With recurring payments, you can automatically deduct funds from your customer’s bank account on the same date every month.
Customers love recurring payment options because they feel it’s a “set it and forget it” transaction. It eliminates the need for your customer to set reminders or manually enter their payment information each billing cycle.
When setting up recurring payments, you’ll need to select a billing system. A good system should be able to accept orders from a web or mobile checkout, correctly bill customers based on your pricing model (flat-rate billing or tiered pricing, for example), and collect payments using whatever payment methods your customers prefer.
You’ll also want to make sure your recurring payments solution can update expired or inactive cards on file and retry a transaction a certain number of times if the card is declined. This will help prevent any delays in rebilling, which can be frustrating for your customer.
4. Create an invoice
Once you have an invoice set up and ready to send, it’s time to accept payments online. Your customers can pay you by using their debit card or credit card or via electronic bank transfer, and payment receipts are sent to your email inbox immediately.
Getting paid can be a challenge for some businesses, so it’s important to find ways to make payments easy. A good way to do this is by including clear payment terms on your invoices. These terms should include the due date for payments, accepted payment methods and whether partial or full payment is acceptable.