While it’s easier than ever to build a website to reach consumers around the world, setting your business up to accept online payments is a bit more complicated. Even if your business doesn’t have a significant online presence and simply needs to allow local customers to use a variety of payment methods, setting up the right payment processing software to facilitate transactions is essential for sustainable success.
How Does Payment Processing Software Work?
It would be easy to simply describe payment processing as the “middleman” that connects your business to the financial institutions that manage credit cards and bank accounts, but it’s helpful to understand how that process works in practice. This will help you to select the payment processor that’s right for your business. All payment processing software consists of three key elements:
- Merchant Account: All customer payments are deposited into your business’s merchant account. While it may not be the primary account where you manage your day-to-day expenses, any transactions carried out through your payment processing platform go through here.
- Payment Processor: The payment processing company manages the back end of the processing software and helps to connect your business to credit card and banking networks to facilitate transactions. They are typically responsible for ensuring the security of transactions and dealing with fraudulent activity or chargebacks.
- Payment Gateway: As the name suggests, the payment gateway connects your physical and online point of sale (POS) systems and your merchant account to credit card networks and issuing banks. Without a payment gateway, there would be no way to transfer data between accounts.
Payment gateways can only be created by organizations that qualify as a Member Service Provider (MSP) or an Independent Sales Organization (ISO). This status ensures that they meet the appropriate financial, technical, and security requirements to manage payment information securely. To maintain that status, payment processors must continue to meet PCI DSS security standards. Created by an association of credit card companies, PCI DSS compliance covers a broad range of cybersecurity and information management requirements that help mitigate risk and protect financial data from being compromised. When a transaction takes place, merchant payment processing software follows a series of steps to approve and complete the purchase:
- The POS submits the transaction details to the merchant payment gateway, which then shares that information securely with the processor.
- The processor delivers the information to the customer’s bank or credit card network (depending upon the payment type).
- The issuing bank reviews the transaction and then approves or denies it.
- If the transaction is approved, funds are released and transferred to the merchant account.
- The approval/denial notification is sent back to the processor, which is then relayed to the POS through the merchant gateway.
This entire process typically takes place within a few seconds, although it can take up to a few days for the actual funds to be transferred to the merchant.
Why Your Business Needs the Right Payment Software to Grow
If your business is planning on accepting credit card, debit card, or ACH payments in any capacity, you’re going to need some form of payment processing services. It is essential to take a long-term view of how you expect your business to grow when selecting the right payment processor, however. Not every merchant payment processor provides an “all-in-one” solution. Some only connect existing merchant accounts to their merchant gateway while others provide both merchant account services and the software integrations needed to set up a POS for online payment processing.
Experience Cutting-Edge Payment Processing Solutions
AppTech’s revolutionary payment processing software FinZeo™️ is an all-in-one payment processing solution that makes facilitating transactions easier than ever. With no reserve requirements and no hidden fees, our online payment processing allows merchants to keep more of their hard-earned revenue so they can grow their business. Whether you’re using our dedicated payment processing software, connecting to our merchant gateway through our robust API, or installing our innovative solution to start accepting online payments within minutes, FinZeo has the payment processing solutions you need to rise above your competition. Contact our team today to find out just how much you could be saving with our payment processing services.