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Payments in eCommerce: Money Processing and the Rise of Mobile Payments

Published  |  8 min read
Key Takeaways
  • ECommerce payment processing and the rise of mobile payments have transformed the way businesses transact online.
  • With the right payment processor and a focus on security and customer experience, businesses can leverage mobile payments to stay competitive in the digital marketplace.
  • By understanding the advantages and disadvantages of a payment processor and mobile payments, businesses can make informed decisions and choose the right payment methods for their needs.
  • Choosing the right payment processor is one way that eCommerce stores can reduce expenses.

In today's world, eCommerce has become a major part of the global economy. Online shopping is on the rise; with the pandemic, it has become even more popular. Even many people who weren't interested in online shopping found the need to jump in over the last few years.

However, with eCommerce comes the need for payment processing, and the rise of mobile payments. In this article, we will cover everything you need to know about payment processing in eCommerce and the rise of mobile payments. Let's take a look at how you can best take advantage of it.

A payment processor takes digital payments for an online store.

What Is eCommerce Payment Processing?

ECommerce payment processing refers to the process of accepting payments for goods and services sold online. The process involves a variety of steps via a payment gateway, including authorizing transactions, verifying payments, and transferring funds between merchant accounts.

ECommerce payment processors can be divided into two categories: card-based payments and non-credit card payments. Card-based payments involve debit or credit card transactions, while non-card-based payments include bank transfers, e-wallets, and mobile payments.

Payment processor funds are sent from one merchant account to another.

Types of eCommerce Payment Methods

There are several types of payment processors options available, including:

Credit and Debit Card Payment

Credit and debit card payments are the most commonly used payment method in eCommerce. Customers enter their card details during checkout, and the payment is processed through a payment gateway provider.

Digital Wallet Payment

Digital wallet payments, such as Google Pay, PayPal, and Apple Pay, are becoming increasingly popular in eCommerce. Customers can securely store their payment information in a digital wallet and use it to make purchases online.

Bank Transfer Payment

Bank transfer payments involve customers transferring money directly from their bank account to the merchant account. This payment method is less common but can be useful for larger purchases.

A payment processor can take many types of payment for an online store.

Advantages of eCommerce Payment Solutions

An eCommerce payment processor refers to the electronic payment methods used by online businesses to accept payment from customers for their products or services. Here are some advantages of using a payment gateway.

  1. Increased sales: By accepting various payment methods, online businesses can attract more customers and increase sales. Customers are more likely to purchase from businesses that offer convenient payment options.
  2. Improved cash flow: Payment gateways allows businesses to receive payments faster, which can improve their cash flow and help them manage their finances more effectively.
  3. Enhanced security: Online payment processors use advanced security measures to protect customers' sensitive information, such as credit card numbers and personal details. This helps to prevent fraud and increase customer confidence in the online payment system.
  4. Cost savings: ECommerce payment gateways can help businesses save money by eliminating the need for manual payment processing and reducing the cost of handling cash or checks.
  5. Global reach: With a payment processor, businesses can reach customers from all over the world, which can help to expand their customer base and increase revenue. This is especially important with B2B payments.
  6. Data analytics: Payment processors often provide businesses with access to data analytics tools that can help them track and analyze customer behavior and make informed business decisions.
A payment processor can accept Google Pay, Apple Pay, and many more.

Disadvantages of Using a Payment Processor

While payment gateways offer many benefits, there are also some disadvantages that online businesses should be aware of. Here are some of the main disadvantages:

  1. Transaction fees: ECommerce payment processors charge transaction fees for each payment received, which can add up over time and reduce a business's profit margins.
  2. Chargebacks: Chargebacks occur when a customer disputes a payment and requests a refund from their bank or credit card company. Chargebacks can be costly for businesses, as they often incur additional fees and may result in lost revenue.
  3. Fraud: Online businesses are at higher risk of fraud due to the anonymity of the internet. Fraudulent payments can lead to chargebacks and loss of revenue, as well as damage to the business's reputation.
  4. Technical issues: Payment gateways rely on technology, and technical issues can occur, such as system downtime, which can disrupt a business's operations and cause delays in receiving payments.
  5. Limited payment options: Some customers may prefer to pay using alternative payment methods, such as digital wallets or cryptocurrencies, which may not be supported by all eCommerce payment gateways.
  6. Compliance requirements: ECommerce payment processors must comply with regulations and industry standards, such as PCI DSS (Payment Card Industry Data Security Standard), which can be complex and time-consuming for businesses to implement and maintain.
Transferring payment information for online purchases always poses a challenge.

The Rise of Mobile Payments

Mobile payments in eCommerce have increased significantly in recent years due to several factors:

Convenience

Mobile payments allow customers to make payments to merchant accounts quickly and easily using their smartphones, without the need for cash or physical credit cards.

Security

Mobile payments are often more secure than traditional payment methods, as they use advanced encryption technologies and biometric authentication.

Increased Smartphone Usage

With the widespread adoption of smartphones, more people have access to mobile payment apps, making it easier to use them for everyday transactions.

Contactless Payments

The COVID-19 pandemic has accelerated the adoption of contactless payments—which can be made using mobile payment apps—to reduce the risk of transmission through physical contact.

Rewards and Loyalty Programs

Many mobile payment apps offer rewards and loyalty programs, which incentivize customers to use them for their transactions.

Integration with Other Apps and Services

Mobile payment apps can be integrated with other apps and services, such as ride-sharing and food delivery apps, making it easier for customers to make payments for these services.

Global Adoption

Mobile payments have become increasingly popular in many parts of the world, particularly in countries where traditional banking infrastructure is limited. This also helps with international transactions.

A payment processor aids in international payments.

Mobile Payment Options

There are several mobile payment solutions available, including mobile wallets, peer-to-peer payments, and mobile point-of-sale systems. Each option has its unique features and benefits, allowing merchant accounts to choose the right option for their needs.

Mobile payment options have become increasingly diverse, providing businesses with a range of choices when it comes to accepting payments for eCommerce processing through mobile devices. Here are some of the main mobile payment methods available:

Mobile Wallets

Mobile wallets allow customers to store their payment information, such as credit card numbers and bank account details, securely on their mobile devices. This information can then be used to make payments quickly and easily, without the need to enter payment details manually.

Peer-to-Peer Payments

Peer-to-peer payment apps, such as Venmo and Zelle, allow individuals to send and receive money directly from their mobile devices. These apps are often used for personal transactions, such as splitting a dinner bill or paying back a friend.

Mobile Point-of-Sale Systems

Mobile point-of-sale (mPOS) systems enable businesses to accept payments through mobile devices, such as smartphones or tablets. These systems can be used by a merchant account to process payments in-store or on the go, making them ideal for businesses that operate in multiple locations or attend events.

Payment gateways facilitate global eCommerce business.

Mobile Payment Security

Mobile payments security refers to the measures taken to protect customers' sensitive information and prevent fraudulent transactions when making payments through mobile devices. Here are some of the main security features of mobile payments:

  1. Encryption: Mobile payment apps use advanced encryption technologies to protect customers' payment information, such as credit card numbers and personal details. Encryption ensures that the information is scrambled and unreadable to anyone who may intercept it.
  2. Tokenization: Some mobile payment apps use tokenization, a process that replaces customers' payment information with a unique token. This token can only be used for a specific transaction and is meaningless if intercepted by a third party.
  3. Biometric authentication: Many mobile payment apps use biometric authentication, such as fingerprint or facial recognition, to verify the user's identity before processing a payment. This ensures that only authorized users can access and use the app.
  4. Two-factor authentication: Some mobile payment apps require two-factor authentication, which involves using a second factor, such as a code sent to the user's phone or email, to verify the user's identity before processing a payment.
  5. Fraud detection: Mobile payment apps often use fraud detection algorithms to identify and prevent fraudulent transactions. These algorithms analyze transaction data and look for unusual patterns or behavior, such as transactions from unfamiliar locations or unusual spending patterns.
  6. Secure networks: Mobile payment apps use secure networks to transmit payment information, such as SSL (Secure Sockets Layer) or TLS (Transport Layer Security) protocols, to ensure that the information is transmitted securely.
Payment gateways for merchant accounts offer digital payment options.

Integrating Mobile Payments into Your eCommerce Strategy

Integrating mobile payments into your eCommerce strategy can help you improve the payment experience for your customers, increase sales, and stay ahead of the competition.

Choose the Right Payment Provider

There are many mobile payment providers available, each with its unique features and benefits. Choose a provider that offers the payment options your customers prefer and has a proven track record of security and reliability.

Make Mobile Payments Visible and Prominent

Ensure that mobile payment options are visible and easily accessible on your website or mobile app. Consider adding payment icons or banners to the checkout page or homepage to encourage customers to use mobile payments.

Offer a Seamless Checkout Experience

A seamless checkout experience can help reduce cart abandonment rates and increase customer satisfaction. Consider using a mobile payment provider that offers a one-click checkout or automatic payment feature to make the checkout process quick and easy for customers.

Ensure Security and Compliance

Mobile payments involve sensitive customer information, and security is critical. Ensure that your mobile payment provider is compliant with industry security standards, such as PCI DSS, and uses advanced security features, such as encryption and tokenization.

Analyze Customer Behavior and Preferences

Use data analytics tools provided by your mobile payment provider to analyze customer behavior and preferences. This information can help you identify opportunities to optimize your eCommerce strategy and improve the payment experience for your customers.

Offer Incentives for Using Mobile Payments

Consider offering incentives, such as discounts or loyalty rewards, for customers who use mobile payments. This can encourage customers to use mobile payments and increase customer retention.

Payment processing provides payment solutions for merchant accounts.

Find the Best Payment Gateway For Your Business

The process of accepting payments for online transactions has always been a challenge for businesses. With the advent of online and mobile payments, the process of using a payment processor has become more accessible and convenient.

Clarity has an excellent solution to the problems that still bother many online businesses, namely the fees that crop up. For a free demonstration of how you can avoid some of your fees, check out the Clarity Payment Hub.

Clarity Venture's payment hub links merchant accounts.

FAQ

 

Payment tokenization improves security, reduces fraud, simplifies compliance, enhances the customer experience, and speeds up payment processing. It is an essential process for businesses handling payment data when dealing with a payment processor.

 

The primary types of payment systems in e-commerce are credit and debit cards, e-wallets, bank transfers, cash on delivery, mobile payments, and cryptocurrencies. E-commerce businesses should offer multiple payment options to cater to their customers' preferences and needs.

 

You should choose the mobile payments system that best fits your eCommerce business. Here are the 3 main types of mobile payments and what they're for:

  • Mobile wallets are convenient for customers, as they can store all their payment information in one place and make payments quickly and easily.
  • Peer-to-peer payment apps are ideal for personal transactions and can be used to split bills and share expenses among friends and family.
  • Mobile point-of-sale systems offer businesses the flexibility to accept payments from customers using mobile devices, making them ideal for businesses that operate in multiple locations or attend events.

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Stephen Beer is a Content Writer at Clarity Ventures and has written about various tech industries for nearly a decade. He is determined to demystify HIPAA, integration, enterpise SEO, and eCommerce with easy-to-read, easy-to-understand articles to help businesses make the best decisions.