Understanding How Global Payment Processing Systems Work

If you are planning to open an e-commerce business, you must understand that the system involves selling to customers across the globe. Luckily, the shopping process has been simplified by the abundance of companies that handle the shipping process, and the fact that there are countless methods of paying for the goods bought online.

Payment gateway systems have been around for a while, and they are the fastest and most secure way to pay for goods bought online. The only shortcoming, which comes with some global payment processing system is that when the user does not understand how it works, simple complications could have serious consequences on your brand.

The payment process

The payment process starts with the cardholder. The moment that they decide they want to pay for something, they press the checkout button displayed at the storefront. The following events then follow:

• The gateway will capture the details of the transaction request. The request is then re-routed into an acquiring bank.

• The acquiring bank runs the necessary fraud checks against the transaction and if they approve the transaction, they channel the transaction to the issuing bank.

• The payment gateway will then tell the shopper whether their transaction was completed or not.

From the surface, the process may seem very simple. However, there are certain complexities, which come with the system and sometimes, with most of them occurring because not all banks use the same method to route their transactions.

Some problems which arise during the transactions

There are a number of reasons why complications arise in the transaction process.

• Some global payment processors are only able to partner with one acquiring bank worldwide. The problem with this arrangement is that if the bank is domiciled in the country, all transaction coming out of the US will be treated as a cross-border payment and this may lead to the payment getting declined.

• Other global payment processing systems will have a bank in the US, another in Europe and the third one in Asia. While this will give shoppers a simpler time when trying to get their payments processed, it will not eliminate the possibility of payments bouncing off completely.

• The third are processors who have multiple acquiring partners. Some have more than 20 acquiring partners, which means that regardless of the corner of the world where the payment is made, verification will be attempted several times, which will increase the possibility of success.
The process, which is followed in routing the transaction to an acquiring bank depends on the location of the buyer. For instance, if they are in Europe, the transaction will be routed to a bank closest to them. Each merchant will have routing rules, which determine where each of the transactions is channeled to.

The best advice is to look for a global payment processing system, which gives you coverage all over the world on a single account. The efficiency of the payment processing system, which you attach to your e-commerce site will have an impact on the overall customer experience. As a result, you will either make or break your business.