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Payment Processing 101: What Ecommerce Retailers Need to Know

Rich Sharptek
Rich Sharptek

Which payment portals are right for your business and customers?

With the widespread use of internet-based shopping, ecommerce retailers and businesses must meet certain requirements, including the use of various online payment methods. Credit cards as a means of payment have become increasingly commonplace.

Consider North America, where approximately 90 percent of online transactions involve the use of a credit or debit card. Ecommerce retailers are now realizing the importance of keeping sensitive information (like bank and cardholder details) safe and offering multiple payment plans to ensure a loyal, satisfied and recurring client base.

As businesses bring their operations to the web, payment processing, payment methods, client protection and general security are all factors that must be addressed. Of course, ecommerce businesses differ from traditional retail businesses because most (if not all) of their income is directly sourced from online transactions rather than a mix of the traditional card and cash model (aside from online businesses that defer payments through wire transfers).

It's vital for ecommerce retailers to develop a solid understanding of the payment processes of their businesses, as well as the systems and tools available to maximize security and efficiency and produce effective results.

Payment processing

Keeping the clients' personal and bank information safe and secure should be a top priority for any ecommerce business (and its web developers). With a wide variety of payment processing partners to choose from, sometimes making the right choice isn't an easy task.

Ecommerce business payment processing methods should be strictly in line with the Payment Card Industry's Data Security Standards. It will save you and your business a lot of stress to ensure you meet proper guidelines for the highest form of security for all parties involved. Although recommendations and requirements differ for ecommerce businesses of varying sizes and kinds, a few basic procedures are recommended to maximize safety and security while also allowing streamlined transactions:

  • It's always a good idea to set up and maintain a firewall to protect sensitive cardholder information.

  • Avoid relying on vendor-supplied default systems for various passwords and security measures.

  • Ensure that the cardholders’ data is protected always. That means no shortcuts!

  • Antivirus software is an effective measure to counter dangerous malware that could potentially compromise security. The latest and most up-to-date antivirus programs should always be installed to avoid bugs and glitches.

  • Always maintain, employ and encourage secure systems when handling sensitive information.

  • Assigning unique ID passwords to customers can make the process of purchasing or navigating the website a lot easier while adding an extra layer of protection.

  • Once they're installed, it's always a good idea to regularly test your security programs' efficacy to maintain consistent quality.

How to choose the best payment processing methods

The primary goal for choosing a payment processing method should be to make it as personalized as possible. Customers typically expect a business to offer more than one payment option, so it's integral to choose a payment processor that is convenient and allows a smooth experience for both you and the consumer.

Although it's become almost universal for businesses to use credit and debit cards as the primary form of payment, if you also offer options like bank transfers and PayPal, you can cater to a wider variety of customers.

To determine the best payment method for your company or business, taking a quick customer poll and distributing it to past clientele can give you an excellent idea of what your consumer base is looking for. The main objective for any business should be to ensure customer loyalty and happiness, as ecommerce usually involves customer purchases from the websites they already know how to navigate.

Methods of online payment

While credit cards are the primary option for most ecommerce retailers, this method can be rather expensive due to transaction fees, which add up. Alternatively, debit cards typically have the same amount of security but cost far less per transaction and can widen a customer base to low- and medium-cost products.

While these methods are often the primary means of online payment transactions, ecommerce businesses are looking to alternatives to better serve their particular clienteles. Here are some of the most popular alternatives available to businesses.


A wholly owned subsidiary of eBay, PayPal is a payment method designed for online payments and money transfers. An alternative to paper money, PayPal has proved an effective and widespread means to make transfers and purchases and perform money orders within an electronic platform through a wide range of services.


Square is an effective processing payment application commonly used on iPhones and iPads. Bypassing the need for a card or cash, it can act as a viable alternative to credit or debit cards. It also offers invaluable tools to record sales transactions, identifies top-purchasing customers and has a host of other valuable data-collecting tricks.

Google Wallet

Google Wallet is another payment alternative to your traditional credit or debit card. It's basically a digital wallet where customers can electronically store money and use it to purchase goods or products from online retailers. Merchants can streamline the checkout process for consumers, as this method can be linked to Google sign-in. As a result, customers can bypass signing up for registration on retailers' sites.


Dwolla is another great payment option for those seeking an online payment alternative. It essentially allows businesses of any kind or individuals to request and send money. Dwolla is also a cost-effective and convenient substitute for a debit or credit card.

Amazon Payments

Amazon Payments features an option to log in and pay with Amazon, which enables millions of customers who already have Amazon accounts to purchase products easily. Registered customers can shop from other ecommerce businesses with a simple click of the mouse.

Where to go from here

Depending on your clientele and the type of payment method you want to use, shop around for the best option while keeping in mind the safest and most secure means of processing online payments and transactions. Visa Checkout, Mastercard's Masterpass, clearXchange, Intuit PaymentNetwork, Bill Me Later and even Bitcoin are all effective payment processing methods that can be tailored to unique business models.

The payment method will depend on the per-transaction price that suits your business model as well as your clientele and the product or service your business offers. Remember, the payment tools available are virtually endless, but it's an ecommerce retailer's task is to find the right ones.


Best Small Business Credit Card Processor - Helcim



Best Processing Terms - Flagship

When you're looking for a credit card processing service, one feature you should insist on is a contract with month-to-month terms.



Best Processing Rates - Fattmerchant

Looking for a solution for low card processing rates? Consider Fattmerchant to save the most per transaction.


Image Credit: Pachai Leknettip/Shutterstock
Rich Sharptek
Rich Sharptek Member
I am a family man, foodie, and former restaurant owner. I left the restaurant industry for the food service industry and a more traditional schedule when I started my family a decade ago. Since then I've helped grown into the successful B2B/B2C e-commerce distribution business that it is today.