Published April 8, 2020
The U.S. Department of Commerce estimates 2019 ecommerce sales topped out at $601.7 billion, an increase of 14.9 percent (±1.1%) from 2018.
New studies project worldwide retail ecommerce sales will reach a new high by 2021. In addition, the global effects of the COVID-19 pandemic have seen businesses increasingly shifting to online operations to continue their sales as their storefronts are temporarily forced to close.
This means retailers and restaurants need to ensure they have a quality and affordable online payment processing solution in place, or risk getting left behind. They should also understand the differences between built-in platform processors, payment gateways and payment processors.
Before determining which of these are the right choice for your operation, however, you first need to be set up to receive online purchases.
Just as retailers need a point-of-sale terminal to accept cash, checks and credit cards in the physical retail space, you also need a few things to process payments made through your website. This includes:
1. A registered website domain name that your business owns and a service that hosts your site’s web pages, including the webstore
2. An e-commerce platform that allows customers to purchase your products
3. An online payment processor that meets mandates such as the Payment Card Industry Data Security Standard
4. A merchant bank account that can receive online customer payments
1. Once a customer browses the website and chooses items to purchase, they’re taken to a checkout page to enter their payment information and confirm their order.
2. The customer’s payment information is sent to an intermediary that facilitates a transaction between the payment processor and the merchant. This is called a gateway and, if integrating directly with a payment processor, can be bypassed.
3. This processor securely contacts the bank that issued the customer’s credit card, such as Bank of America, through its payment card network, such as Visa, MasterCard and American Express.
4. Depending on the customer’s balance, the issuing bank will either approve or decline the transaction and send a response to the intermediary via the card network.
5. If approved, money will be transferred from the customer’s account to the merchant’s once settlement is completed.
Online credit card transactions are processed through payment processors but can also be looped through either platform processors or gateways on their way to the payment processor.
A platform processor is built into the e-commerce platform that provides a company’s web store. For instance, if you choose to have your company’s web store hosted by an e-commerce platform, you have the option of using its in-house intermediary.
The main benefit is convenience. If your company already uses that web store, the intermediary will allow you to monitor payments, establish an order placement/payment processing timeline and schedule payouts of funds collected.
The main drawback is that they aren’t actually processing your payments. They can only forward your payment to the payment processor.
These can also serve as a business’s online payment processor. They handle the same back-end functions as a built-in payment processor, but it isn’t limited by platform and doesn’t do the actual credit card payment processing itself. Those functions are handled by a third-party company that the merchant never interacts with directly.
This may be a less-than-ideal solution for brick-and-mortar retailers for a few reasons:
• Unless they use an e-commerce platform that integrates their chosen processor into its platform, owners will have to keep track of all the online orders the company receives through two different portals
• The fee structure has to cover credit card processing fees and its own operating costs, potentially making it a more expensive solution than dealing with a payment processor directly.
Partnering with a payment processor reduces the number of steps your payment goes through to be processed, which could lower the cost per transaction. However, the payment processor may not have as many features as a gateway or platform.
NCR Payment Solutions includes specialized platforms, a gateway and payment processing, allowing us to customize a payment solution to your business needs. And as a full-service payment processor, NCR can also handle all of your company’s POS credit card processing with cutting-edge terminals, PIN pads and EMV compliant chip card readers.
In addition to offering retailers secure and expedient online credit card processing, NCR Payment Solutions also offers robust ecommerce features like recurring payment, batch processing, chargeback-reducing, dynamic descriptions, automatic account updating and mission-critical marketing tools like real-time reporting and in-depth analytics.
If your company is interested in a comprehensive and cost-effective payment processing solution for both the physical and digital retail space, contact an NCR Payment Solution representative today.
NCR is committed to helping financial institutions of all sizes navigate the many challenges of the COVID-19 outbreak. For more information, contact NCR.
Our banking solutions experts are in the trenches with our customers, working hard to help provide guidance, solutions and recommendations.
You can find us at NCR.com/payments, have us call you back, call in the U.S. at 1-800-834-4405, or email us at firstname.lastname@example.org.