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B2B Payment Processing Essentials All businesses, including those in high risk industries and Internet based businesses need payment processing solutions.
Here we will discuss the best payment processing companies and the payment processing solutions available. But first it is important to understand the basic concepts of payment processing.
Business Debit Cards: Debit cards and credit cards can both be used to make purchases and pay for services. With a debit card the funds are withdrawn from the cardholder’s bank account as soon as the purchase is made. With a credit card the funds are only withdrawn from the cardholder’s bank account monthly and interest charges are added. In addition debit card purchases must be paid in full at the time of the transaction whereas with credit cards the customer can pay off the amount due over the course of several months.
Loading a Prepaid Debit Card for your Business:
A prepaid debit card for your business is loaded with funds in advance then the card can be used for fast transaction, payments and purchases. You can reload a prepaid debit card with funds from your business checking account. Some providers only allow transfers that are linked to your bank account while others will let you reload your prepaid debit card from authorized accounts of associates, friends or family.
There are several ways of load your debit card:
Payment Processing Services: Merchants use payment processing services to complete the purchasing procedure from initiation to receipt of funds. Although payment processing is most commonly associated with handling the credit and debit card purchases made at a business it actually involves a lot more.
B2B Payment Processor Service: A service used by merchants to handle transactions made using specific channels, for example credit cards and debit cards. Once a payment has been made to the merchant the payment processing company verifies the payment authenticity by contacting the card’s issuing bank/association; conducting anti-fraud procedures and checking other parameters to ensure the transaction is approved by the card issuer including the card’s country of origin and payment history. All this is done in seconds by efficient payment processors insuring that your business can receive payments and run smoothly.
B2B Payment Processing Procedure: The moment a customer presents his card to the B2B merchant for payment of goods or services the payment processing procedure is initiated. The payment processing company captures the transaction and card information then routes that information to the card’s issuing bank or financial institution for verification and approval.
Acquiring Bank: The acquiring bank (also known as a credit card bank, clearing bank, merchant bank or acquirer) is a financial institution licensed by a card association (Visa, MasterCard etc.) to authorize and process credit card transactions on behalf of merchants. Businesses hold credit card merchant accounts at acquiring banks so that they can process card payments as well as a corporate account at their own bank.
Chargebacks: A chargeback is when a client disputes a transaction made with your business using their card. First the client’s bank/card issuer initiates a retrieval request asking for information about the transaction charged to its cardholder. The retrieval request may be made because the customer says he never made the purchase; because he says he never received the goods; wasn’t satisfied with them or simply because the transaction information was inaccurate or incomplete. It can also be because potential fraud is suspected or that there has been a processing error. You need to provide the client’s bank with the relevant documentation; proof of purchase or proof of delivery by a particular “respond by” date. Businesses usually have 10-20 days to contest the claimed chargeback. If the merchant does not respond or if the information provided is unacceptable the retrieval request becomes a chargeback. At this point the issuing bank contacts the merchant’s bank and the funds related to the claim are withdrawn from your account until the dispute is resolved.
The customer’s credit card company considers all the information presented to them and comes to a decision usually within 75 days. The chargeback is resolved either by the customer getting his money refunded or by the merchant having the funds credited to his account. In addition to losing the profit from the sale merchants are charged a chargeback fee by B2B merchant account providers for handling the dispute. Businesses need to safeguard against chargebacks in order to protect their reputation and operate profitably.
The B2B Card Payment Transaction Terminology
The nomenclature of payment processing can be confusing as there are several words for each key player and some functions can be performed by more than one organization. For example there are even instances (like Bank of America, Barclays and Wells Fargo) where the financial institution is both the issuer and the acquirer.
A card payment transaction begins when a cardholder enters his card information online/over the phone or swipes his card at a merchant’s business. The card information is sent to a payment processor (or via an e-commerce payment gateway) where the processor requests authenticity validation for the transaction information from the issuer of the card. The issuing bank or financial institute then approves or denies the use of the card and informs the processor. The processor then sends the answer back to the merchant who can complete the transaction. The issuing bank clears the order so that funds are transferred to the acquiring bank, where the merchant holds his merchant bank account.
Cardholder: An individual (acting on his own behalf or for a company/entity) who makes payments using his credit card at a merchant’s business.
Merchant: A company that accepts credit card payments for goods or services.
Payment Processor: This organization is contracted with the acquirer to process card transactions. The processor sends the payment transaction information from the merchant to the issuing bank (the bank that issued the customer’s credit card) for transaction authorization then relays the information back to the merchant and acquiring bank.
Payment Gateway: (if not combined with the processor). This is technology that transmits e-commerce and card-not-present payment information between the merchant, issuing and acquiring banks.
Issuing Bank/Institution: The issuer is an institution that issues credit and debit cards to individuals, businesses or entities subject to usage conditions laid out in a contract. Most cards are issued by financial institutions or corporate entities that offer credit and issue cards on behalf of banks whose name appears on the cards. The issuing bank or institution is responsible for transactions made using its cards and acts as a middleman between the customer and card network. They are responsible for debiting funds from the cardholder’s account when a purchase is made.
Acquiring Bank: The acquirer is a bank, financial institute or large company that maintains merchant bank accounts allowing businesses to accept card payments and other electronic payments. The acquirer assumes the risk and guarantees payment to the merchant while passing the transaction information on to the card issuer to complete payment. In order to operate as an acquirer in SEPA countries a bank or financial institute must meet the requirements of the EU’s Payment Service Directive (PSD).
Top Payment Processors/B2B Merchant Account Providers for Online Businesses in Europe.
These financial organizations can provide you with a full service and a range of products for processing card payments made to your online business. These payment processors act as a middle-man between the merchant and the issuing banks/credit card networks. They cover the complete payment process from initiation to receiving the funds in your bank account.
PayPal
Perhaps the best known and most widely used of the top payment processors; PayPal’s payment gateway processes billions of transactions annually. Their services and technology are state-of-the-art; they have stringent fraud protection features; comprehensive support services and most importantly PayPal is easy to use and ideal for small or new businesses. PayPal can be integrated with all major online shopping carts and e-commerce platforms. However PayPal charges hefty fees which can be too expensive for small e-businesses. Merchant fees can be around 3.5% to receive funds and an additional 2.5% if the funds need to be converted into a different currency.
Amazon Payments
Amazon Payments is one of the leading payment gateways for small e-businesses. They hold more than 330 million customer accounts with over 65% of payments being made from mobile smart devices. The advantages of Amazon Payments include the fact that it is easy to use, easily installed on e-commerce websites and they support mobile payments and banking.
2Checkout
With 2Checkout you can get a demo of how it works before installing it. 2Checkout operates in 15 languages and offers 87 currency options making it the payment provider with the highest global reach. The API is easy to incorporate directly onto your site and offers an all-in-one monetization platform. The design of this payment processor is specifically geared towards growing your business so that you can choose only the services you need and add additional ones as your business grows.
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