Secure payment processing is essential to an eCommerce business. Following correct order management in the payment processing module is critical to ensuring customer security.
Plus, demonstrating your commitment to secure payment will enhance the customer experience. If something goes wrong during payment processing, it can make customers uneasy about returning to your business. Having a customer's data compromised can be the kiss of death for online businesses of any size.
Putting payment processing best practices in place is an essential part of a successful system.
The payment processing part of the order management process is how your customers purchase their products. Each order has to be paid for before it's fulfilled and shipped.
Payment processing best practices begin with a secure way to run credit or debit cards, receive payment through third-party apps like Venmo and PayPal, or using smartphone payment apps like Google Wallet or Apple Pay. TradeGecko also offers an online payment system through TradeGecko Payments. Offering multiple payment methods improves the custom experience, allowing them to pay through split payments between two different payment methods or use the payment method they feel most comfortable with.
Payment processing can be automated, which reduces many errors, such as double charging a customer or fulfilling an order without payment in full. Plus, automation reduces the manpower necessary to take payments, including over-the-phone collections.
Payment processing also involves refunds and reimbursements for customer returns or for incorrect orders.
Authorization is the process by which a transaction is approved or declined. Your automated order management software will check the customer's payment method to ensure that the funds are there, putting a "hold" on the appropriate amount until the transaction is finalized. Authorization isn't the same as a completed payment, but rather a verification that the cardholder has enough funds in the account.
Once the authorization is approved, the transaction is cleared, delivering the final transaction data from your store to the issuing credit card bank or the payment app. It's also the calculation of certain payment processing fees which you, as the retailer, will pay to the credit card company. Then, the transaction amounts are converted to the appropriate settlement currencies.
The settlement is the actual payment for the product. This aspect of payment processing calculates, determines, reports, and transfers the net financial amount and clears the transaction through the bank or payment application.
When this process is automated, there's no guesswork over how to charge the customer.
Some credit card companies may charge an additional fee for online merchants who don't directly reverse any unused credit card authorization. Merchants may authorize a cardholder's account, but for some reason, the transaction may not go through, perhaps due to a cancellation or user error. Automating the reverse authorization and releasing the authorization hold on a customer's credit card account can help your eCommerce business avoid these fees. Plus, if a customer does decide to cancel or postpone their order, having their funds released right away improves the experience they have with your store.
Another feature of automatic payment processing is pre-settlement support. This enables a partial or a complete charging of the order at any stage of the placement process. It's most common for pre-ordering merchandise or in situations where the customer orders online and picks up the item in stores. For eCommerce businesses, however, it may also include a customer ordering an out-of-stock item that's on backorder. The item has already been "sold" to the customer and set aside from your inventory, pending the arrival of the item for fulfillment. The payment collection process is initiated, but the order isn't completed until the product is available for shipment. Then, the authorization moves to the settlement.
Automated payment processing can also track your orders as "authorized", "invoiced", and "paid". If you work through an invoicing system through some of your sales channels, then automating your ordering and payment status ensures that no orders are fulfilled without being invoiced and that each customer has the appropriate invoice for their order. This also helps balance your Accounts receivable ledger, as well as track the aging of certain invoices.
An automated invoicing process will initiate the settlement process for many kinds of automatic software via time-triggered transactions or APIs.
Refund fulfillment and returns payment processing is another feature of online payment processing. Ensuring that a customer receives a speedy refund will increase their chances of purchasing from you again. Delays in getting their money back or an overly cumbersome refund process could lead a customer to placing orders with a competitor in the future. Best practices for refunds and exchanges involve the retention of the customer's original payment method and synchronizing the value of the return on the order.
Set up a payment processing system that automatically credits the customer back. Instead of requiring a manual reversal of the transaction or processing the credit, you can streamline the returns process on your eCommerce store.
TradeGecko features TradeGecko Payments, allowing merchants to send email invoice reminders to retailers so they can get paid faster.
All your products, customers, orders and transactions synced and secure in the cloud.