Payment Processing

The choice between batch and real-time processing is mostly based on the number of transactions that occur on your site. Your hardware and software requirements will depend on your processing method (batch or real-time) and business needs. If you decide to implement real-time processing, you will require payment gateway software to authorize and process the credit card number in real-time.

For low volume sales, manual processing is a viable route. The order is received with the credit card number through a phone call, fax, or online form and processed manually, either by contacting the payment processing company to verify the credit card number or by using a point of sale terminal to swipe the card. It is less costly and also protects against fraud, as you have more control over the processing procedure. The major disadvantage is the amount of time taken to manually process orders.

On the other hand, real-time payment processing means the credit card is automatically processed when the customer submits an order. Once the credit card is verified and approved, the customer receives immediate notification that the order is accepted and the funds are transferred from the customer’s bank account to the merchant’s account. It’s better for large volume sales and for products that are sent electronically. Time is saved in processing the order, but it is more expensive to have and requires continuous monitoring to ensure there is no downtime.

On choosing batch payment processing, you essentially have two options that enable you to manually process orders. One, you can purchase software that allows you to transact your orders manually. The software is housed on your computer’s hard drive and is connected to your bank through a modem and telephone connection. Second, you can buy a point of sale terminal to key in credit card numbers as they come in.

Leasing a terminal is an option, but it is not always the cheapest route. For example, perhaps you want to purchase a POS terminal that would cost you $400 to buy. To lease the same terminal using a 10 percent interest rate for three years you would pay $520. So, in fact you are paying $120 more than if you had purchased the terminal. And, in most cases, the original price is marked-up to start. Therefore, it is better to shop around and look for the best purchase deal.