Payment Processing is used to accept payments when selling products or services. The type of payment which is accepted mostly depends on the place and nature of the sale.

Types of Payment Processing

Online Payment Processing is usually carried out through third-parties known as payment processing agents. These agents handle the online credit card payment processing and make it easier for the merchant to receive his or her funds quickly as well as have protection from potential fraud by a customer. An online payment processor is basically a complete front-end for the merchant, handling any and all sorts of transactions, including credit cards, debit cards, direct debit, bank transfers and real-time bank transfers. Some notable online agents which offer merchant payment processing include PayPal, Payment Processing Inc, Neteller and 2Checkout. A merchant account is also needed to accept payments as all incoming funds are directed towards this account. Although some banks also offer solutions for merchants, there is usually a higher fee and much stricter restrictions on these accounts as compared to ones which are affiliated with a different provider. It is also much harder to get approved for banks as compared to processing agents.High Risk Merchants may even find it impossible to get accepted by a bank.

Payments are also processed for tangible goods in retail outlets. Methods used in processing transactions such as these typically include cash, or credit cards/debit cards through a POS terminal.

Payment Processing Benefits

Processing transactions, especially through online Credit Card Processing, offers considerable advantages to the merchants, and can be a great help in significantly increasing the volume of sales carried out. Customers feel at ease if they have to route their transaction through a known and trusted payment processor such as PayPal or Neteller. The acceptance of credit cards in particular has been proven to lead towards greater sales because it significantly increases the customers’ buying power.

There is, however, a constant threat of potential fraud by the payment processor. Therefore it is always recommended to carefully research a company before starting any dealings with them. The Better Business Bureau and online forums are excellent sources to find any complaints.