Understanding The Terminology Of Online Payment Services
Several terms like payment gateway, payment processor, payment provider, payment service or system and merchant accounts can be used when describing online payments. All of them though distinct with just subtle differences refer to a company, service or application that acts as a middleman between your website and your customer and then between both your bank accounts. They enable the completion of online transactions and the processing of online payments.
- A payment gateway is a process that receives the online payment request from your website and it then redirects it to the payment processor.
- The validation of the customer’s credit card details is done by the payment processor.
It then checks if the customer has enough money in the account to cover the payment. If there are enough funds in the customer’s account, then the payment goes through without any problem. The status of the payment is then transmitted back to the payment gateway which in turn sends a status message to your website. A payment provider sometimes offers multiple payment options. A payment service or system refers to each type of payment option offered to the customer by the payment provider. Another important term in the online payment service that has to be understood is the merchant account.
In order to be able to accept online payments, you will be required to set up a merchant account without which you will be unable to offer online payment options to your customers. When an online transaction is completed successfully the funds get transferred from your account to that of the merchant’s account, thereby completing the whole payment process successfully. In case there are funds accumulating in the merchant account, they are then transferred to the organization’s bank account on a regular basis. Online payment services can’t store funds; they only aid the online payment process.
As you have read above, all the terms that online payment services can be referred to as, have some subtle changes in them, which is always good for us to be aware of.
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