| Just a few short years ago, online businesses still relied heavily on offline, paper-based methods for receiving payments. It was not at all unusual for early e-tailers to ask customers to print out an order form, fill it out manually, and mail it in along with a check. Needless to say, we’re quickly approaching the twilight of that era, and, all nostalgia aside, it’s doubtful its passing will ever be mourned. Plastic has become the payment method of choice for e-commerce, and an overwhelming majority of online shoppers — nearly nine of ten in the United States — make their online purchases using a credit card.
Today’s online businesses accept credit card payments in one of two ways: they either employ an automated “real-time” payment processing system or they process orders using offline, manual methods.
Though its popularity is beginning to wane, manual credit card processing is still used by a number of online businesses. Under this system, customers submit their credit card information over the telephone, by e-mail, or by fax. Upon receiving the information, the merchant manually processes each order during regular business hours.
Manual processing comes with its share of drawbacks. As a result of valid security concerns, experienced online buyers are reluctant to submit credit card information by e-mail or fax. Likewise, telephone order-taking can take a significant toll on impulse buying — especially due to the fact that most shoppers still have to disconnect from the Internet in order to free up a phone line. And, needless to say, if a merchant intends to do even a modest amount of business, manual processing can quickly become a cumbersome, tedious chore.
On the other end of the spectrum is automated payment processing - a method rapidly gaining momentum with large and small businesses alike. As the name suggests, automated payment processing automates the process of receiving payments over the Internet. To enable automated payment processing on a website, an online business must enlist the services of an Internet payment gateway company. Here, transaction information (including credit card information) is entered by the consumer on a secure online order form. The information is then “captured” and submitted to the Internet payment gateway protected by state-of-the-art encryption technology. The payment gateway routes the information to financial institutions for processing and returns the authorization response to the consumer — all in a matter of seconds.
The benefits of automated payment processing — for both customer and merchant — are plentiful. By employing a secure real-time credit card processing system, merchants are able to provide customers with near-instant purchase confirmation. In the event a credit card is declined, customers can go back and correct mistakenly entered information or use a different card if necessary. For their part, merchants are able to automate the time-consuming task of manually obtaining authorizations for transactions.
When selecting an automated payment processing service for your online business, security, speed, and reliability are important factors to consider. Whichever service you choose should use powerful encryption technology to ensure the integrity of sensitive data. Even if you don’t intend to process a huge volume of transactions initially, your service should have the ability to handle high sustained and peak-period transaction volumes without a glitch. And to ensure that your ‘real-time authorizations’ are indeed conducted in ‘real-time’, authorization responses should be returned to customers in fewer than ten seconds.
Another important consideration in selecting a payment processing service for your online business — and one that tends to get overlooked — is customer service. Make sure your provider will address any issues you encounter in a timely fashion. If not, you’ll be putting the single greatest benefit of an e-commerce business model in jeopardy — the ability to sell your products and services to a global market, 24 hours a day, 7 days a week.
By taking advantage of real-time credit card processing, you’ll be able to automate key business processes and free up time for other essential tasks.
You’ll expand your potential customer base to include impulse buyers and a growing number of savvy Internet shoppers. And you’ll take a solid step forward in enhancing your online credibility and securing your position as a serious Internet enterprise.
(Editor’s Note: Kelly Andrews is Marketing Communications Manager for PaymentOnline, a Seattle company that provides real-time payment processing and professional storefront development services. She may be reached at (206) 382-1515 ext. 235 or at kelly@paymentonline.com.). |
