How to Process a Payment
The major difference between a subscription website and a normal marketing website is the ability to take payments for access to a membership area.
This may seem like a simple element to plug in, but you must make sure that the payment service is linked to the member database and the content management solution.
Because they all have to work very closely together. When someone signs up as a member, they must be linked to the member database so that they can be automatically issued a password. The member database must be linked to the content management service so that the password can be input and the member can be given access to the content they signed up for.
But for now, let's focus on payment processing.
In simple terms, payment process goes through three steps:
- Your Website - The prospect enters credit card details into the order form on your website.
- Payment Gateway - The encrypted details are sent to a payment processor that checks that they are correct, valid, not stolen and not blacklisted.
- Merchant Service Provider - If the card details appear to be OK, they are passed to the merchant service company. They take the money and pass it back to the website owner, minus their fee.
Once a visitor decides to subscribe to your service, they click on a link that takes them to an online order form. Although the transfer to the order form page appears seamless to the client, they should be moved onto a secure server, which means all the information they type is encrypted before it is sent over the internet. You can tell if the server is secure because the ‘http’ in the internet address line changes to ‘https’.
The client fills in the order form with personal details and credit card information.
When they press ‘submit’, the information is sent to the gateway provider, who checks all of the details against their records.
This includes looking for lost, stolen, blacklisted and invalid cards. It also looks at the probability of fraud given the information provided. For example, if the transaction had come from a Nigerian IP address, but the card was registered in London where it had been recently used, they would flag this up to the site owner.
If the gateway provider believes the transaction is legitimate, then they proceed to complete the transaction with the merchant service provider.
At the end of each day, all merchant service providers reconcile all the transactions to ensure the right money ends up in the right bank accounts.
Usually the payment gateway and the merchant service provider are two distinct services, although they can be provided by the same company. For example, HSBC offer a Merchant Services Account and they also have a payment gateway service called ePayment.
The advantage of getting both services from one supplier is that they should work well together and should be easy to set up. The disadvantage is that in the long run, it will cost you a lot more than using separate providers.
There are also a lot of companies that just provide a Payment Gateway and rely on you to get a Merchant Services Agreement from your bank.
The good news is payment processing is being exposed to international competition and prices and fees are coming down. Within months, we expect PayPal to enter the market with some new services that should give the banks a good run for their money ... and not before time.