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Nowadays, it would seem like every company is trying to sell something over the internet. But behind the various websites the sell goods and services is the complicated process of setting up a payment system that is both reliable and secure.

Merchant Account

In order to understand how payment systems for ecommerce would work, you must first try to think like a banker. Every offline business establishments needs to have a merchant account in order to accept credit card payments but this is especially true in an online business where card payments is the preferred payment method. In the past, merchant accounts were harder to set up because banks used to require that a business should have existed at least two years before their application can be approved. In addition, this business must be tied up with a property or a street address to be considered. But this is not the case today because various service bureaus such as the First Data Merchant Services, Authorize.net, and many other providers has made it easier for online business owners to open a reliable merchant account.

When a customer uses his credit card to pay for something over the internet, there are several stages he has to go through for his transaction to be processed. These include authorization and capture. Basically, authorization refers to the act of verifying in an account number is valid, if it still has enough credit, and if it is not reported as stolen or lost. The address of the customer will also be matched against the account to deter any fraudulent activities. Meanwhile, capture refers to the approval, the posting, and the shipment of the products. Capture can happen in three ways. First, it can occur during the authorization process with the bank wherein the bank clears both the credit card and the storefront’s account. Second, it can happen after the authorization occurs but you will need to conduct a separate capture process. And lastly, it can occur on hourly batches where the storefront owner will need to coordinate with a card processing intermediary.

PayPal

Aside from credit card payments, another popular way to send money online is PayPal. If you are wary about revealing your credit card information over the internet then using PayPal may be the answer for you. PayPal is basically an online account that allows you to send and receive money instantly. Note though that to fund or withdraw money from your PayPal account may take several days.

Online stores such as Ebay.com promote the use of PayPal extensively partly because Ebay.com also owns PayPal. Sending and receiving money from PayPal is also easier for international users because they do not need to shoulder the costs associated with credit card payments when they use this account. PayPal accepts various cards such as Visa, American Express, MasterCard, and Discover so you can fund your account easily and conveniently.

Right now, a lot of merchants already accept PayPal payments but there are still some that only accept credit card payments. Even if this is the case today though, it is undeniable that more merchants will accept PayPal payments in the future because customers have already accepted it as a reliable payment method.

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