By: Kacy O'ConnellEvery company's needs vary greatly, but one thing stays constant: payment processing is required. However, as consumers, we may not give much thought to the complexities of payment processing.
You're well on your way after pressing a button, swiping a card, or transferring funds. On the business backend, however, payment processing can be a complex requirement that necessitates the use of a well-designed, secure, and efficient fintech solution.
Plug-and-play options like Stripe or PayPal represent dependable processing solutions for simple transactions for many organizations. However, businesses may require an additional layer of assistance or more complicated integrations to complete, monitor, and track transactions and related activities as transactions and financial management needs become more complex.
Customized integrations assist startups, small enterprises, and large corporations bridge the gap between their current payment processing system and their business requirements.
What is the procedure for processing payments?
Before we get into the mechanics of payment processing, we must first identify the leading players: merchant accounts, payment processors, and payment gateways.
Merchant Account
A merchant account is a commercial bank account that serves as a go-between for your customers and your business bank account. It is exclusively used to collect payments from customers or clients, specifically those made with a credit or debit card.
The money is transferred directly to your merchant account when your business is paid. You can then use those monies to manage expenses like utilities, rent, and so on by transferring them to your typical business bank account. In addition, merchant accounts can receive payments either through a card processing terminal or online.
Payment Processor
A payment processor oversees, arranges, and transmits essential data to the customer and your merchant account, whereas a merchant account retains the money. Payment processors keep track of transactions and report them to your customer's bank and your account. It also guarantees the integrity of a transaction by ensuring that the information provided (e.g., CVV, expiration dates, cardholder information, etc.) is correct.
Gateway for Payments
Virtual point-of-sale systems are what payment gateways are. When customers complete a purchase in person, they may use a POS system or a credit card reader to swipe their card.
However, they employ a payment gateway if they complete a purchase through online checkout. The information is captured by the payment gateway and submitted to the payment processor.
A customer will provide their information at check out if each payment player functions as expected. The payment gateway will collect this information and deliver it to the payment processor.
The information will next be subjected to an integrity check by the processor. The transaction is complete if everything is correct. The monies will be deposited into the merchant account once the payment has been processed and will remain there until the merchant makes or schedules a withdrawal or transfer.
Custom Payment Processing vs Off-the-Shelf Payment Processing Software
There are a plethora of payment processing options available to business owners today. Stripe, Clover, Square, and other companies provide simple payment processing options that business owners can use. Many organizations turn to these off-the-shelf payment processing solutions because payment processing can be so complicated. Even if they are a popular option, many clients find that they lack dependability, security, and efficiency when they are linked with existing or new platforms—fintech or otherwise. Though each organization is unique, we've discovered that clients who pick custom payment processing software over an off-the-shelf alternative enjoy the following advantages:
Customized for easy integration
Integration of existing payment processing solutions with backend and customer-facing platforms might be complex in some circumstances. This is especially true when you want to automate or simplify complex procedures, such as automatic billing, or processes unique to your company and hence not easily handled by basic apps. These flaws can have far-reaching and negative consequences for the security, integrity, and efficiency of your company's payment processing and related activities. Custom payment processing software makes it easier to provide a transactional experience that meets your criteria to customers and staff.
Fewer fees
The use of payment processors and payment gateways is not free. Merchants typically pay for services when they sign up or on a subscription basis, but it isn't the sole cost of third-party payment processing. The merchant is responsible for per-transaction fees each time a customer completes a point-of-sale purchase or goes through online payment processing. Transaction fees can add up quickly if your customers only or frequently use credit cards or electronic payments. Those fees might cut into your revenue over time. On the other hand, custom payment processing software can help your company improve billing operations, decrease superfluous transactions, and gain more control over fraud issues, recurring transactions, and refunds. In addition, customized integrations can help you save money on fees and other associated costs.
Enhanced security and compliance
Compliance and regulatory requirements abound in payment processing, many of which are in place to protect customer and company data. Payment processors and merchants, for example, must comply with the Payment Card Industry (PCI) Data Security Standards (DSS). Failure to do so might result in data breaches, hefty fines, and a terrible business image. Popular payment processing solutions adhere to these guidelines, making them a safe and secure way to handle payments.
The danger of costly security or compliance concerns increases when your transactional demands get more advanced, and your organization relies on cross-company platform interfaces, manual processes, or on-the-fly customizations. You can ensure that transaction-based procedures are simplified and safe, and that data is captured, processed, and stored properly by investing in custom payment processing software.
Support for multiple payment processing solutions
Consumers today have a wide range of payment options, but that does not mean that every off-the-shelf payment solution supports them. Some may refuse to accept particular credit cards, while others may only accept payments through PayPal, Amazon, or Apple Pay. As a result, you may need to rely on numerous payment processors to serve clients, which can lead to a slew of backend integration challenges. Thanks to customized software, multiple payment processors can be easily integrated with your backend platforms, applications, and workflows.
Scalable to meet evolving business needs
Your company is constantly changing. This can result in an inflow of consumers and transactions at times. Those things may be reduced at other times, particularly during generally weak seasons or quarters. In addition, customer requirements and payment processing patterns evolve. Payment processing software custom designed for your organization allows it to adapt to changing business and customer needs, whether they are industry, consumer, or company-specific. Furthermore, because you'll control the customized software, you'll be able to make changes as needed rather than relying on third-party apps or complicated backend workarounds to meet your demands.
Centralized payment processing
Payments are frequently misunderstood as a fluid procedure in which monies are easily transferred from client to merchant and vice versa, but this is not the reality. Depending on who is receiving the funds, payment processing takes on a varied appearance. This might be difficult when businesses need to process refunds or deposit monies into a customer's account. Investing in custom payment processing systems allows you to centralize your operations and move payments swiftly and efficiently as needed. There's no need to wait for a lengthy dispute or arbitration process or rely on a third party to fix or reinforce the client experience.
Your business can't function without a dependable payment processing solution, but that doesn't mean you must entrust your company's future to a third-party provider. On the contrary, investing in a custom payment processing system will enable your company to manage transactions and finances in a way that meets not only the demands of your customers but also the needs of your entire company.
At Provisio, our goal is to provide clients with custom software that will help you rise above the competition while building solutions that streamline your business and serve both customers and staff.
Contact us today to set up a free collaborative consultation so that we can work together on a payment solution that will help your company grow and evolve.