Accepting Payments Online: Why? How? Costs and Benefits.

Increasing cash flow is a top priority for any business out there. As a result, many companies are turning to online bill payment systems to help get paid faster, save time, and reduce costs. By having an online bill payment system companies can automate their accounts receivable process, provide more options for their customers to pay, and significantly reduce the number of paper invoices that must be printed and sent. Furthermore, no more waiting for a check to show up, depositing it, and then waiting for the funds to clear. Collecting funds through an online bill payment system is not as difficult as you may think. Let’s take a closer look at the process and how it works:

How Do Online Payments Work?

The process starts when a customer submits a payment for an invoice. Once payments are sent, the payment gateway takes over and passes the order information securely between you, your client, their credit card provider, and your bank by encrypting sensitive information. The process below will go through the entire online payment data flow:

Step 1. The merchant submits a credit card transaction to the credit card Gateway on behalf of a customer

Step 2. Payment Gateway receives the transaction information and passes it via a secure connection to the Merchant Bank’s Processor.

Step 3. The Merchant Bank’s Processor submits the transaction to the Credit Card Network (a system offinancial entities that communicate to manage the processing, clearing, and settlement of credit card transactions).

Step 4. The Credit Card Network routes the transaction to the Customer’s Credit Card Issuing Bank.

Step 5. The Customer’s Credit Card Issuing Bank approves or declines the transaction based on thecustomer’s available funds and passes the transaction results back to the Credit Card Network.

Step 6. The Credit Card Network relays the transaction results to the Merchant Bank’s Processor.

Step 7. The Merchant Bank’s Processor relays the transaction results to Credit Card Gateway.

Step 8. The Customer’s Credit Card Issuing Bank sends the appropriate funds for the transaction to the Credit Card Network, which passes the funds to the Merchant’s Bank. The bank then deposits the funds into the merchant’s bank account. This step is known as the settlement process and typically the transaction funds are deposited into your primary bank account within two to four business days.

Costs of Gateways

There are costs associated that go along with the benefit of being able to accept payments online. Costs typically associated with payment gateways include discount rates, which are commissions taken from your customer’s payment and can range from 2-6% of the sale. Other costs include one-time setup fees and monthly fees which can vary by gateway. If you are processing a low number of online billing transactions a month, it’s important to take these various costs into consideration.

There are numerous benefits of allowing your customers to pay invoices online. From increasing cash flow to giving customers more options to pay, accepting payments online can prove to be a good business decision. If you are looking for more information on how online bill pay capabilities integrated with Microsoft Dynamics GP can help your business, view this case study covering how Discrete Wireless, was able to provide its customers with a strategic online payment solution. For more information on what online bill payment solution might be right for your business please contact us at Azox

By Azox – E-Commerce for Microsoft Dynamics GP