Credit cards are still one of the more prevalent modes of payment, especially for relatively traditional users who do not have familiarity with emerging platforms

In an increasingly cashless economy, digital payment platforms like cryptocurrencies and electronic money are an emerging means of checkout and settlement. However, undoubtedly, credit cards are still one of the more prevalent modes of payment, especially for relatively traditional users who do not have familiarity with emerging platforms like Bitcoin, Ethereum and the countless other cryptocurrencies out there.

Using cards can be very straightforward for users, which makes digital purchases convenient for buyers and profitable for users. In fact, when Amazon implemented its patented 1-click system in 2000, profits surged by around 5 per cent annually, which means several billion US dollars for the company – just by providing a frictionless payment system for users.

In addition, using credit cards can also be rewarding for end-users, especially since card providers give back rewards in the form of rebates, freebies, and discounts.

For merchants, however, credit cards can involve a lot of overhead, in terms of cost and paperwork. For one, as a merchant, you will need to rely on your credit card processor to handle and settle all details regarding accepting payments, especially if it is a digital transaction.

It is therefore necessary for any e-commerce merchant to understand the basics of credit card processing before you start accepting it as a payment method. The technologies have evolved through the years, although the basic concept remains the same.

Also read: How Bitcoin works, and why its invention is one of the most revolutionary in tech innovation

Here are the few considerations when adding credit card processing to your e-commerce solution.

Who will play the roles in the process?

You need to know who are the main parties involved before getting your company a credit card processor. There will be six parties involved, which means the transaction is not only you and your customers.

This will involve:

• You, as the seller or e-commerce platform owner
• Your (merchant’s) bank
• The issuing bank
• The credit card brand (major brands like Visa and MasterCard should come to mind)
• The payment processor
• The end-user or buyer

The payment processor will be responsible for determining whether the customer is legitimate, and it is the one who records all transactions that take place on the platform.

Who will be responsible for security?

While hacking, phishing, and other malicious attacks have become prevalent of late, there are still businesses and end-users who are not aware of the risks involved in digital transactions. For example, with identity theft, an end-users’s credentials can be stolen and used to make online purchases. Likewise, weak security on the payment processor’s part can leave the system open to man-in-the-middle attacks.

Generally, the system is only as strong as its weakest point. This means that an end-user who responds to a phishing request and reveals his password becomes a risk to the system, especially if a malicious hacker uses the details to make illegal purchases. There are also organisations bent on breaking into merchant accounts with the aim of stealing customer data, which can include personal and financial information.

Thus, on your part, you will need to educate yourself on the ways of firming up security through better assessment, reading up on latest security trends, and working with your payment processor to ensure you both mitigate the risks. You can also implement security improvements, such as tokenisation or secure-click payments, to ensure both secure and convenient access to your customers.

How about the processing fees?

When using credit card processing, there will be several fees involved when adopting this service. In order to reduce the processing fees, choose a company that offers the most optimal cost. There will be a fees from setting up to processing and even providing customer service. It is crucial to find a good and perfect service provider.

Some regional and local providers also offer several Point-of-Sale (POS) options like virtual terminals, like the MOLPay VT app which can be activated within few seconds. This app can accept more than a credit card as a method of payment, such as online banking, invoicing, and Alipay Wallet.

Set up the correct merchant account. Read and understand the agreements carefully, and make sure there will be no hidden fees or charges before signing the agreement.

Also read: By enabling access to the underbanked, these fintech startups will change the face of e-commerce in Asia

Conclusion

For any e-commerce merchant, it will be important to offer multiple channels of payment, including digital money (like PayTM and PayPal, for example), credit cards, cryptocurrencies, and – in some markets – even cash-on-delivery. For any option, however, consider the overhead costs, the risks, and the benefits to you as a merchant.

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