Managing online sales seems like a simple enough task for any business, right? Especially if you’ve been operational for a long time, adding an online store seems like a natural progression into the digital age where online shopping drives the economy and accounts for millions of dollars in sales revenue per day.
But the truth is, understanding card not present transactions and common concerns like merchant chargeback protection is not very easy at all — and because so many business owners don’t understand the basics, they don’t really know what to expect and what to look for when they need merchant chargeback protection.
So, with that in mind, it’s probably best to start at the beginning! Here are three basic — but incredibly important — terms that you need to know in order to understand your business’s payment processing system:
- Merchant account: This is essentially a bank account for a business which specializes in handling the transfer of credit card and debit card payments. When businesses choose to make sales online, they have the choice of using a merchant account provider as a sort of hosting service, or they can use a third-party payment processing company that handles everything.
- Payment gateway: Payment gateway services are somewhat similar to POS (point of sale) systems in brick-and-mortar stores; instead of using a POS system to monitor credit card transactions, businesses that make sales online use a secure payment gateway service. This is a service that ensures the card is valid, has enough funds, and is being used legally.
- Payment processor: This term can actually mean a bunch of different things, depending on who you’re talking to, but it typically refers to the service that mediates the payment gateway process and provides merchant chargeback protection.
So, is there anything you’re still a bit confused about? Any questions you have about these three terms? Feel free to leave any questions or comments below! More on this topic.