What is Payment Processing & How Does it Work?

ByManoj Bhatt

Payment processing is the technology that allows businesses to accept and process payments from customers. This can be done in-person, online, or via mobile devices. There are a variety of payment processing options available, each with its own benefits and drawbacks. The right solution for your business will depend on your specific needs and preferences.

In-person payments can be processed using point-of-sale (POS) terminals, which are connected to a payment processor. This allows customers to swipe their credit or debit card to make a purchase. POS terminals can also accept payments via NFC (near-field communication), which is becoming increasingly popular as more people use mobile devices to pay for goods and services.

Online payments can be processed using a payment gateway, which is a software that connects your website to a payment processor. This allows customers to enter their credit or debit card information on your website and make a purchase without having to leave the site. Payment gateways are typically provided by payment processors or third-party service providers.

Mobile payments can be processed using a mobile app, which is a software application that allows customers to make payments from their mobile device. This can be done in-person or online. Mobile apps are typically provided by payment processors or third-party service providers.

Payment processing fees vary depending on the type of transaction and the payment processor. In general, businesses are charged a percentage of the total transaction amount, plus a flat fee. For example, a business that accepts credit card payments may be charged 2.9% + $0.30 per transaction.

There are a few things to keep in mind when choosing a payment processor:

  • Make sure the processor can handle the volume of transactions you expect to process.
  • Compare fees and terms to find the most affordable option.
  • Consider whether you need additional features, such as a payment gateway or mobile app.
  • Read reviews and compare customer satisfaction ratings.

The bottom line is that payment processing is a vital part of doing business in today’s world. There are a variety of options available, so it’s important to choose the right one for your business. With so many options available, there’s no reason to overpay for payment processing.