Accepting credit card payments is the foundation of successful eCommerce businesses. Even the sleekest online store can’t run without an efficient, secure credit card processing system. However, eCommerce payment processing is a complex space to explore, especially for those not in the know.
In this comprehensive guide from Payment Nerds, we’ll walk you through the essentials of setting up a reliable eCommerce credit card processing system, ensuring you deliver a seamless payment experience to your customers.
What is eCommerce Credit Card Processing?
eCommerce credit card processing refers to the system that enables online businesses to accept card payments from customers[1]. This system is implemented and maintained through payment service providers, which are companies specifically organized to help other businesses with secure payment processing and connections to credit card networks like Visa and Mastercard.
At its core, it involves three crucial steps: authorization, authentication, and settlement. When undergoing authorization, a payment processing service validates the customer’s card details and ensures they have sufficient funds.
Your processor will then authenticate and confirm the transaction is legitimate, often using encrypted tokens that ensure user information remains secure. Once the customer’s payment details and available funds are confirmed, the transaction is approved. From there, the settlement process begins, transferring the funds from the customer’s bank to the business’s merchant account[2].
Throughout these steps, the payment processor acts as the middleman between your business, the customer, the banks, and the card networks. In the eCommerce space, ensuring a seamless and secure process is vital to building trust and boosting sales. Let Payments Nerds provide everything you need for the specific needs of online businesses like yours.
Key eCommerce Payment Methods to Include
Your eCommerce business should support multiple payment methods to cater to increasingly diverse customer preferences. Here are a few must-haves to consider:
Credit and Debit Cards
Credit and debit cards remain the most popular payment method for online transactions. They’re straightforward, familiar, and almost universally accepted. Ensure you work with payment processing and merchant account providers who support major card networks like Visa, Mastercard, American Express, and Discover.
ACH/Bank Transfers
For high-value transactions, ACH (Automated Clearing House) payments are an excellent option. These enable your customers to make direct transfers between bank accounts, ensuring they are much more likely to have available funds for their purchase. ACH payments also often have lower processing fees than credit card transactions, making them advantageous for your business.
Digital Wallets & Apps
Digital wallets like Apple and Google Pay are gaining popularity due to their convenience and security. They allow customers to pay with stored card details or linked bank accounts, often through their smartphones and other mobile devices. Digital wallets effectively reduce checkout friction, giving customers a satisfying shopping experience through seamless online purchases from your business.
Buy Now, Pay Later (BNPL) Services
Buy Now, Pay Later (BNPL) services like Afterpay, Klarna, and Affirm allow customers to split the total cost of their purchases into manageable installments. Providing these as part of your pricing structure, especially if your products or services are pricier than others, ensures more customers can afford to purchase.
Setting Up eCommerce Credit Card Processing for Your Business
Setting up your eCommerce credit card processing system involves a few critical steps. Follow each of these closely:
- Choose a Payment Gateway: A payment gateway is the technology that connects your website to the payment processor. At Payment Nerds, we provide an excellent range of payment gateways, among other eCommerce payment solutions[3].
- Open a Merchant Account: A merchant account temporarily holds funds before transferring them to your bank account. Processors like Payment Nerds provide merchant accounts along with our broad collection of services[3].
- Integrate with Your eCommerce Platform: Ensure your chosen processor is compatible with your eCommerce or web hosting platform, such as Shopify, WooCommerce, or BigCommerce. Payment Nerds provides custom solutions to ensure our payment gateway and APIs can integrate with dozens of platforms and software applications[3].
- Set Up Secure Payment Systems: PCI-DSS compliance is a must. Look for processors that provide security features like tokenization, SSL certificates, and two-factor authentication as part of their payment gateways. This ensures customer data is protected from malicious hackers[3].
- Test the System: Run test transactions to ensure everything works smoothly before launching. Verify the checkout process, refund mechanisms, and transaction reporting features.
Finding the Right eCommerce Payment Processor
Choosing the right eCommerce credit card processor is critical for your business. The payment processor you select will impact your costs, customer experience, and even your ability to expand into new markets. Here are the essential factors business owners should consider when evaluating payment processors:
Look Up Reviews & Testimonials
Other businesses’ experiences can provide valuable insights into a processor’s performance. Look for reviews from businesses in your industry and pay attention to common praises or complaints.
Find out if other business owners are satisfied with how easy the system is to set up and use. Also, find out if there have been any recent issues with previous customers over unexpected costs or fees.
Most importantly, try to find out how many businesses have stuck with the processor over time. If you hear anecdotes that suggest high customer turnover rates, they’re likely not a good processor.
Check for Transparent Pricing
Understanding cost structure is one of the most critical aspects of choosing a processor. More importantly, you should see if a given processor is transparent about transaction fees. Fees can vary widely between providers, so it’s essential to compare them among providers, as well as their pricing models, to ensure your work with a feasible credit card processing service.
Here are some of the different pricing structures you can expect to find among payment processors:
- Flat-Rate Pricing: This model charges a consistent percentage for each transaction, regardless of the card type or amount. It’s straightforward and ideal for small to medium-sized businesses that want predictability.
- Interchange-Plus Pricing: This model breaks down the cost into the interchange fee (set by card networks) and a fixed markup from the processor. While it’s more transparent and often cost-effective for larger businesses, it can initially be complex to understand.
- Tiered Pricing: Transactions are divided into tiers (qualified, mid-qualified, and non-qualified) based on factors like card type or customer location. This model can include markups that lead to higher costs, especially if your business is considered “high risk.” Fortunately, you can get approved — high-risk businesses are our specialty at Payment Nerds.
When applying to potential providers, ask for a detailed breakdown of fees, including per-transaction costs, monthly fees, and any setup or cancellation fees. Avoid processors that lock you into long-term contracts with hefty early termination penalties.
Assess Their Security & Fraud Protection
In eCommerce, trust is everything. Customers need to feel confident that their payment information is safe when shopping on your website. Look for processors that go above and beyond basic security measures to ensure this for your business.
The first thing you should look for is a strong track record in PCI-DSS compliance. This ensures they follow all current standards correctly. A good processor will also simplify this process, offering built-in compliance tools and guidance.
Some processors also provide fraud detection tools and support services, monitoring transactions and flagging potentially fraudulent activity. Compliant processors also ensure your payment system includes advanced encryption and tokenization. These technologies protect sensitive card information during and after transactions, reducing the risk of data breaches.
Consider Payment Method Availability
Modern consumers expect options at checkout, and providing a variety of payment methods can significantly reduce cart abandonment. Based on our previous section on payment methods, make sure the credit card payment processor you choose includes some or all of them, including digital wallet and ACH payment processing. The best processor will accommodate multiple payment options without charging excessive fees for adding alternative methods.
Determine Their Customer Support & Integrations
The best eCommerce credit card processing providers are determined by their security and range of payment options, customer support, and software integrations.
Responsive customer support is invaluable for minimizing disruptions and ensuring smooth operations. The right credit card processor for your eCommerce business should be available around the clock, especially if your business is international.
It should also offer multiple support channels, including live chats, email, and phone calls to direct support representatives. Before committing, test your merchant eCommerce credit card processing service and ensure its support channels provide both immediate responsiveness and expertise.
Your payment processor should integrate seamlessly with your existing eCommerce platform, making setup quick and eliminating compatibility headaches. For custom-built platforms, processors should also provide advanced features like robust APIs that allow for a tailored payment solution.
Credit Card Processing eCommerce Providers to Consider:
- Payment Nerds
Payment Nerds specializes in reliable, secure, and scalable solutions tailored for eCommerce businesses. We pride ourselves on transparency, with no hidden fees, and offer 24/7 support. We ensure our systems seamlessly integrate with your existing platform, regardless of size.
We also specialize in providing payment solutions for tech support companies, travel agencies, and many other types of businesses across numerous industries. Learn more about us today!
- PayPal
Known for its simplicity and global reach, PayPal offers a straightforward setup and supports various currencies. However, it may have higher fees than other processors, which is worth considering for high-volume businesses.
- Shopify Payments
Shopify Payments is designed for Shopify users and offers a fully integrated solution. It eliminates the need for third-party gateways, simplifies the checkout process, and reduces Shopify merchant fees.
- Stripe
Stripe is a developer-friendly platform offering robust APIs for customized payment solutions. It’s ideal for tech-savvy businesses looking for flexibility and scalability.
- Square
Square is known for its user-friendly interface and transparent pricing. While often associated with in-person payments, Square also provides comprehensive eCommerce solutions with excellent analytics and reporting tools.
Summary
Setting up an eCommerce credit card processing system is necessary for every online business. Learning how to set up payment processing and picking the right processor ensures a seamless payment experience that builds trust and boosts sales.
With Payment Nerds, you’ll have everything you need from an eCommerce credit card processing service — advanced security, transparent pricing and fees, custom APIs, 24/7 development support, and so much more. Get started today and discover how we can help you start up or transform your business’s payment processing system for the better.
Sources
- The Ecomm Manager. “Ecommerce Payment Processing: The Best Tools & Strategies for Success.” https://theecommmanager.com/ecommerce-payments/ecommerce-payment-processing-guide/ Accessed December 2, 2024.
- Fit Small Business. “Ecommerce Payment Processing: Guide for Small Businesses.” https://fitsmallbusiness.com/ecommerce-payment-processing/ Accessed December 2, 2024.
- The Ecomm Manager. “Ecommerce Credit Card Processing Guide: How To Set Up & Accept Cards.” https://theecommmanager.com/ecommerce-payments/ecommerce-credit-card-processing-guide/ Accessed December 2, 2024.