Understanding Payment Provider Types: What Online Businesses Need to Succeed
When it comes to choosing the right payment provider, online business owners need to consider various things before signing agreements with partners that are long-term and binding. Factors like user experience, checkout quality, and speed are as important as regional requirements and issues such as cross-border purchasing and currency conversion.
Companies newly entering the world of online commerce and those already operating in it must ensure they choose the right partners to serve their specific business model and the needs of their customer base and target markets. That includes selecting providers with a proven track record and whose reputation proceeds them. Successful businesses rely on customer loyalty and trust, and that means providing them with a seamless, simple, and smart-looking checkout (cashier) page when purchasing products.
Factors to take into account when choosing the right provider include:
- Location Sensitive – Choosing providers who offer the right support to their targeted regions is essential.
- Track Record – When choosing a partner, do your research and ensure the company you sign agreements with is bonafide and with a solid and legitimate reputation behind them.
- Fees and Hidden Charges – Don’t get caught out by hidden fees or charges, often levied by less than scrupulous companies who want to make a quick buck.
- Robust Security – Another vital thing to consider is the cybersecurity levels practiced by the provider or partner. Customers shopping online want and need to feel safe before making payments.
Different Types of Providers – Definitions:
1. Acquiring Banks
Banks or financial institutions that process credit card or debit card payments on behalf of merchants. As part of a Card Scheme, merchants can accept credit card payments from card-issuing banks.
Payment service providers (PSPs), sometimes referred to as merchant service providers are third-party companies that assist merchants (online businesses) to accept payments from around the world. PSPs enable merchants to accept payments by credit/debit card, to perform bank transfers, and to operate real-time banking transactions. In addition to providing various payment solutions to online merchants, a PSP is connected to one or more acquiring banks and can offer several payment solutions. As well as connecting with other PSPs and eWallets.
The service enables users to make payments via a mobile device or an app operating under an electronic money institution (EMI) license. Instead of paying with cash, cheque, or credit card, a consumer can use a mobile wallet to pay for a wide range of services or products. These payments are usually made through QR-Code technology.
4. Issuing Banks
An issuing bank is a bank that provides end-users with branded payment cards directly from the card association, such as credit cards, debit cards, and prepaid cards. An issuing bank (or issuer as it’s commonly called) is the bank of the consumer (also called a cardholder). It is responsible for paying the merchant’s bank (called an Acquiring Bank or Acquirer) for the goods and services the consumer purchases.
5. Payment Gateway
Essentially, a Gateway acts as an interface between a merchant’s website and its acquirer, encrypting sensitive information and passing it securely. A Gateway is like a middleman between customers and merchants. An online payment gateway captures payment data from a customer and transmits it to an acquirer. The payee is then informed whether their payment was accepted or declined. Through a Gateway, the cardholder’s financial information is securely validated, ensuring that the funds are available to the company.
A Reseller, also known as a Dealer, is a company or individual that can introduce new payment solutions or providers to Zotapay’s (processors). Resellers are entitled to revenue share based on the transaction volume via the provided solution and partner agreement they signed with us.
7. Commercial Banks
This type of financial institution accepts deposits, offers checking account services, makes various loans, and offers basic financial products like savings accounts to individuals and small businesses. It can also refer to a bank that deals with corporations or large/medium-sized businesses.
8. How to Integrate with a Payment Provider
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