10 FAQ about Payment Processing
October 30, 2018
Here are some frequently asked questions about credit card processing and the advantages JetPay can offer over both traditional processors and payment gateway services.
How does payment processing work?
When a business accepts payment in the form of a credit or debit card, that payment has to go through a multipart process that transfers funds from the customer’s bank account to the merchant’s.
That process begins when the business, either through a point-of-sale (POS) terminal or online store, sends a request for funds after capturing a customer’s credit card information. Next, the request is sent to a Payment Processor (or a gateway, who sends that information to a Payment Processor). The Payment Processor will then complete a series of checks, (such as for fraud) before verifying the card information either with the bank that issued the credit card, or the appropriate card association (e.g., MasterCard, Visa, etc.) to make sure that the information supplied is correct.
All told, to process a credit card payment, three parties must be paid: the processor of the transaction, and the card brand and the issuing bank.
Which is the best online payment system?
As e-commerce has become a critical component of the global economy, the need has arisen for more secure online credit card processing.
As a result, new entities known as payment gateways have entered the marketplace. These entities provide the electronic equivalent of traditional brick-and-mortar point-of-sale terminals. When your business contracts with a payment gateway, that provider gives you the secure digital tools you need to transmit credit and debit card transaction data from your e-commerce website to a payment processor. The most popular online payment gateways include PayPal, Stripe, and Shopify Payments.
Each of those companies offers different rates and benefits that may be more advantageous to merchants based on their needs. For instance, Stripe charges a flat rate of 2.9 percent plus $.30 for every payment routed through its payment gateway.
Conversely, Shopify Payments might be appealing to burgeoning enterprises because it is fully integrated with their e-commerce platform. However, the service’s drawbacks include a two-day pay period for merchants and a monthly subscription charge on top of Shopify’s standard 2.9 percent plus $.30 fee per credit card transaction.
What is the difference between a payment processor and payment gateway?
There are generally two chief differences between payment processors and payment gateways.
The first is that payment gateways don’t actually process credit card payments themselves. Instead, they partner with a Payment Processor to handle the transfer of funds, and then markup their prices to include the processor’s fees. For instance, Shopify Payments allows its merchant partners to accept credit card payments, but the actual processing is done by a member of their multi-regional payment processing network (and, depending upon the installation, this routing may be facilitated by Stripe).
Another difference is that many popular payment gateways, such as Stripe, do not yet offer POS equipment or software.
Accordingly, businesses that operate in both a physical retail space and online and who choose to do business with a payment gateway might also need to partner with a separate credit card payment processor.
Is JetPay a gateway or a processor?
JetPay is a payment processor that works directly with businesses to process their credit card transactions, both in-store and online. As such, JetPay has POS equipment and virtual terminal services available to its merchant partners.
What credit card processor is right for my business?
Here at JetPay, we offer robust, secure and simplified payment processing, as well as payroll and human resources. Our goal is to provide the best possible payment processing experience for cost-conscious businesses.
Are you interested in slashing your company’s credit card processing fees? Contact JetPay and let us get you started with a free quote.
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