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Reasons to Add Online Payment Service and How It Works for Your E-commerce Store

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Ecommerce stores and online businesses are experiencing an explosive growth. There are over 300 payment methods. It is not easy to select the right online payment method for beginners. Without knowledge this can be tricky. 

Reasons to add online payment services

Meet customer’s expectation

Today, online shopping is the trend. Busy people can shop conveniently from anywhere and at anytime. Many desire to avoid standing in long lines of local stores, so they make purchases from ecommerce shops. 

Therefore, ecommerce shops need to select multiple online payment options to offer better customer experience. Websites that don’t support online payment are seen as unprofessional. 

Speedy process

Online payment process takes seconds as soon as payment method is approved. Consequently, your organization experiences enhanced cash flow and instant transaction confirmation. Online payment service provider will even let you know if the purchaser has enough funds, instantly. 

Saves trouble

Automated payment saves trouble of check depositing and payment recording. Online payments are automatic process.


Certainly, worthy things come at a price. You get charged by the payment provider a small fee per transaction and other monthly fees.

Online payment terminology 

You need to understand some online payment jargon before selecting payment provider. The jargons act as financial medium between your customer and your website as well as between your bank account and you. Each one plays a role in online payment process

Payment gateway  

Online payment request is received from your site and directed to payment processor.

Payment processor 

It validates purchasers credit/debit card details and ensures if your account has enough funds before authorizing the transaction. Funds are transferred from consumers account. Status gets conveyed to payment gateway, which sends a message to your site.

Payment provider

It is the company, which operates payment gateway along with payment processor service.

Payment service/system

Payment provider provides many kinds of payment gateways with variety of features and prices then each kind is called payment service/system. 

Merchant account

After an online transaction gets successfully completed then funds get transferred from purchasers account to merchant account. It s a special type of bank account, which holds funds from debit or credit cards, therefore for online payment set up, you need to set a merchant account with payment provider. Cash accumulated in merchant account gets transferred to your business bank account regularly.

How online payment method works?

For starting online payment, you will need –

  • Merchant account [some payment system doesn’t need merchant account]
  • Account with payment service provider
  • Web page with button to initiate transaction process [special shopping cart software can be used]

Connect your web page with online payment service. Visitors visiting your ecommerce shop will be able to buy your products and pay online. They will add their shopping in the cart and move to the payment gateway. 

Credit/debit card information will be entered and submitted. This information is encrypted and safely transmitted to payment service providers. After verification that consumers account holds sufficient fund transfer will be made from purchaser’s bank account to your merchant account [connected with your website]. 

Your website will be notified about the transaction approval, which will also be visible to the buyer. If transaction gets denied due to insufficient funds or invalid credentials then no funds get transferred, although status data will be mailed to your webpage. 

The entire payment process starts after purchase. It is about encryption, verification, approval, and payment.

Secure features

Few providers offer merchant account along with payment gateway like PaymentAsia, PayPal, and more. Cost of opening a merchant account is high and process is complicated. Therefore, opt for providers offering merchant account and payment gateway. Payment gateway with flexible API helps your team to spend little time on coding to adjust payment needs, especially when large funds are processed. 

When you pay by card at the local store, backend process is similar to online payment process. Still several people find shopping online not feasible. They fear losing funds due to scams. Therefore, make sure to offer secure online payment process. It encourages people to purchase at your e-commerce shop. 

About the author


Sunil Gupta

Sunil Gupta is the founder of ACG Digital Marketing a digital marketing company. All his articles are designed to empower the reader with the latest tools and trends in the world of digital marketing. In his spare time, Sunil loves fishing and playing online games.