This complete guide to payment processing systems will cover topics such as the different types of payment processing systems, their advantages and disadvantages, how they work, common issues and problems that arise with them, and finally best practices for using them.
We will begin this guide by discussing the various types of payment processing systems. There are two main categories of payment processing systems: direct and indirect. Direct payment processing systems are those that require the customer to enter their credit card information directly into a secure online form or point-of-sale device.
Examples of this type of system include Paypal, Stripe and Square. Indirect payment processing systems do not require customers to enter in any sensitive information at all. Examples of indirect payment processing systems include Apple Pay, Google Pay and Venmo.
Next, we'll discuss the advantages and disadvantages associated with these two types of payment processing systems. Direct payment processing systems are generally considered to be more secure because customers enter their credit card details directly into an encrypted form or terminal.
This direct entry eliminates the potential for fraud and misuse of customer data. On the other hand, indirect payment processing systems are more convenient as they do not require customers to enter any sensitive information at all – rather, they simply use a mobile device or bank account to securely authorize payments.
Now let's look at how each type of payment processing system works. Direct payment processing systems involve customers entering their credit card information into a secure online form or point-of-sale device. Once the customer enters this information, it is securely transmitted to the merchant's payment processor. The processor then verifies the customer's identity and checks to make sure that their card has sufficient funds before approving the transaction.
Indirect payment processing systems, such as Apple Pay and Google Pay, use a different method. Rather than entering credit card information into an online form or device, these systems require customers to use their mobile devices or bank accounts to securely authorize payments.
When a customer selects a product to purchase from the merchant, they will authenticate the transaction using their fingerprint, facial recognition, or a PIN code. The merchant's payment processor then verifies the customer's identity and approves the transaction.
Finally, let’s discuss some common issues and problems that may arise with payment processing systems, as well as best practices for using them. Common issues include incorrect billing information being entered into an online form, incorrect transactions being authorized by customers, and fraudulent activity.
To avoid problems with payment processing systems, it's important to use a reputable processor that is reliable and secure. Additionally, make sure to thoroughly test your system before going live and always monitor transaction activity for suspicious behavior or unusual patterns.
The goal of this guide was to provide an overview of payment processing systems, their various types, and the advantages and disadvantages associated with each. We also discussed how they work, common issues that may arise when using them, and best practices for using them securely. With this information in hand, you’ll be well on your way to securely processing payments online.