According to statistics from the U.S. Department of Commerce, American ecommerce businesses saw a nearly 15% rise in online consumer spending in 2019. Overall, customers spent more than $600 billion with online retailers last year, and chances are more than good that online spending will increase this year.
As more retailers and businesses of all types look to offer their goods and services through online platforms, there are a few essentials that they need to support these transactions. In addition to their commerce platform and digital options for customer service, organizations must also have a robust payment portal that can enable payment processing while keeping customer data secure.
But how do these online payment portals work? How do they ensure the security of customer payment information while also supporting merchant’s compliance with PCI DSS? And how does this technology fit into business’s existing payment processing infrastructure?
Today, we’re seeking to answer these questions and more, and provide all the details you need to know about online payment portals.
What is an online payment portal and how does it work?
An online payment portal (sometimes called a payment gateway) is one of the integral digital solutions that merchants need for accepting payments and facilitating transactions between their business and their customers. In order to conduct business online, merchants need:
A merchant bank, or acquirer, alongside a merchant bank account with the bank.
A payment portal, which enables the transaction to be processed, and transferred from the customer, through the payment gateway, and into the merchant bank account.
The payment portal, or payment processor merchant service, is the technology that allows businesses to send invoices to their customers, process and collect their payments. For customers, the online payment portal enables them to input their payment form and personal data, process the payment and view their transaction history.
“An online payment gateway connects your store and your merchant service account, and facilitates the process of the payment transaction between the various parties involved, including your bank and the card issuer’s bank,” Jones wrote. “Think of it as the digital version of a POS card swipe machine used in brick-and-mortar stores.”
What types of payment methods are accepted?
A considerable advantage of using an advanced online payment portal is the ability to accept numerous different types of customer payments. This helps support a better user experience, as shoppers can use the payment form that is easily accessible or most preferable for them.
The best online payment portals will have the ability to accept debit card and credit card payments, as well as ACH bank transfers and eChecks. Customers can input either their debit or credit card number, or their bank account information. Certain advanced payment portals allow these details to be securely stored and saved, making it easier for customers to use these recognized payment methods for future purchases.
How are payments processed?
Once a customer chooses the merchandise or services that they’d like to purchase, select their payment method and input their information, the online payment portal then encrypts this data for secure payment processing. The encrypted payment information is then authorized with the customer’s payment card service provider. Once verified, the payment portal then transfers funds from the customer’s payment card or account into the merchant account.
Depending on the capabilities of the online payment portal solution, this payment processing can take place over the course of a few seconds, or as long as a few days. Selecting a payment portal that enables real-time payments can reduce processing time, ensure payments are verified and posted as quickly as possible, and improve the user experience.
PCI compliance: How is payment processing data secured?
One leading question with online payment portals and other payment processing technology is data security. Because these payment gateways are dealing with highly sensitive, personally identifiable customer information – including cardholders’ or account owners’ names, card numbers or account numbers, and more – this data must be safeguarded during processing, and stored according to the Payment Card Industry Data Security Standard, or PCI DSS.
This security standard requires that this sensitive data is encrypted during the transaction, and that any stored customer payment details are protected from unauthorized access as well. An ideal payment portal solution will also restrict the merchant’s employees from entering customer payment card information, and instead require that consumers input this data themselves. In this way, fewer parties have access to these highly sensitive details, helping to further support PCI compliance.
It’s also best to look for an online payment portal that provides tokenization features. Tokenization enables the payment gateway to be completely isolated from the regular merchant commerce platform and supporting servers. This separation provides yet another layer of security, in compliance with the payment card data security standard.
What does it cost?
Because there are multiple parties involved in online payment processing – including the merchant’s bank and the customer’s card or account issuer – there are certain fees that come with these transactions.
While these fees vary depending on the payment gateway and other factors, these expenses can include fees paid to:
The customer card issuer, called interchange fees.
The credit card association, such as Visa or Mastercard. These are called assessment fees.
The merchant bank.
The payment processing solution provider.
The overall cost per transaction can differ, depending on the type of payment method customers use, as well as the fees associated with the payment processing solution. However, the ability to securely accept multiple forms of customer payments, safely store these for future transactions and support real-time processing makes the cost of the payment portal solution a worthy investment.
Advantages of a best-in-class online payment portal
In addition to understanding how online payment portals work, and how they secure customer information, there are also a few benefits that business users should be aware of:
Compliance: The best payment portal solutions will seamlessly support PCI DSS compliance through industry-certified data protection features, isolation of the payment portal away from the main commerce platform, and limited access to sensitive customer payment information.
Customizability: While the best online payment gateways are siloed from the main website, these portals can still be customized according to the business’s branding and colors. In this way, when customers are sent to the payment portal, the gateway supports a smooth and integrated experience.
User experience: A payment portal like ePay Advantage also enables customers to have access to their own transaction data, including invoices, purchase history, payment activity and more.