What Is a Payment Processor?

May 28, 2024
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You can't have an online business if you don't accept online payments. There are no hand-to-hand cash transactions over the computer. Everything is digital.

We are living in a world where even in-person transactions are done digitally. People are paying with all different types of methods, whether it be credit cards, debit cards, Apple Pay, Google Pay, or something else.

Long story short, if you're selling products or services online—whether they be digital or physical—you need a reliable payment processor.

Today, we will explain what a payment processor is, how it works, what some of the best ones you can choose from are, and how to actually make your decision.

What Does a Payment Processor Do?

A payment processor is a company that handles all the online payments between the vendor and the customer.

Basically, it's the company that acts as an intermediary, securely transferring the money from your customer's payment method (such as a credit card or digital wallet) to your bank account.

These payment processors handle the complex technical aspects of doing online business, making sure that the payments are processed quickly, securely, and efficiently.

How Does a Payment Processor Work?

First, a potential customer has to come to your website, and be intrigued enough to buy what you’re offering.

Once they’re ready to purchase they will proceed in placing the order.

This usually entails some sort of checkout or order form that they have to fill out.

That’s when the payment processor comes into play:

  1. The customer enters their payment information on your order form/checkout page. This is information like their name, email, and of course, the payment details.

  2. The payment processor then securely encrypts the payment information and sends it to the customer’s credit card issuer or bank for authorization to ensure a safe transaction.

  3. The bank or credit card issuer will then decide to verify the payment information and choose to approve or decline the transaction.

  4. The payment processor then receives that response from the bank or credit card issuer and communicates it to you whether the payment was confirmed or declined. It will also relay this information to the customer.

  5. If the payment is approved, the funds will then be sent from your customer’s account to your merchant account, minus any applicable fees charged by the payment processor.

This seems like a lot of steps, and it is, but don’t worry, you don’t have to do any work on your end.

When you have a good payment processor, all this happens automatically within seconds. 

Top Payment Processing Companies You Should Use

SamPay: This is SamCart’s native payment processor. It provides a seamless and secure payment experience with competitive transaction fees and fast payouts. 

Stripe: Known for its developer-friendly APIs and extensive customization options, Stripe is a top choice for many online businesses.

PayPal: With a strong brand reputation and a user-friendly interface, PayPal is a popular option for both vendors and customers. 

Braintree: Braintree is pretty much the same thing as Stripe, except it is owned by Paypal. 

Authorize.net - With a focus on security and reliability, Authorize.net has been a trusted payment processor for over two decades.

What to Consider When Choosing a Payment Processor

You really can’t go wrong with any of the Payment Processors we’ve listed above for you. But let’s quickly cover some key factors you should take into consideration when selecting a payment processor. 

When selecting a payment processor, consider the following factors:

  1. Fees - Be sure to compare the transaction fees, monthly fees, and any other costs that a payment processor will have. Because of tough competition, most of the payment processors will have the same fees, but it’s still important to do your research.

  2. Security - All the payment processors we’ve listed above have phenomenal security; if they didn’t they wouldn’t be in business. But if you choose a payment processor that isn’t one of those five, you want to make sure that it is PCI-compliant and offers robust fraud prevention measures to protect you and your customers.

  3. Integration - You want to use a payment processor that integrates with your current online business set up and all the tools you use. We will come back to this in a second.

  4. Payment Methods - Make sure your payment processor accepts all the most popular payment methods currently being used in the online sales world.

  5. Customer Support - Dealing with the funds of your business is important, so you want to make sure you have a payment processor that offers great support to help you when you need it. 

Enhancing Your Payment Processing Experience

We’ve already established the fact that a payment processor is essential for running an online business and accepting online payments.

But there is a big problem with these payment processors...

They don’t provide you with all the tools you need to optimize your sales and maximize conversions.

For example, if you’re just using Stripe for your order form you won’t be able to accept paypal orders through Stripe. Also, you will need a bunch of different tech stacks to integrate with your membership site, email list, etc. 

In other words, Payment Processors focus on ONE thing, which is securing the payment. 

That’s not necessarily a bad thing, it’s just that they don’t do anything else to help you increase your sales or optimize your process. 

That’s where a tool like SamCart comes in. 

One of the key advantages of using SamCart is that we integrate with all the top payment processors we’ve just mentioned.

So whether you’re just starting out online or you already have a payment processor that you’re using, SamCart can easily connect with them and give you access to all our powerful features while keeping your payments secure. 

SamCart will also integrate with other tools you use to run your business such as membership tools and email service providers.

Plus, SamCart has a slew of features that will allow you to quickly and easily streamline your online sales processes and boost your revenue like:

  • Checkout Anywhere - checkout experiences, like Embed and Slide, that you can add to any part of your marketing and sales process, so your customers can check out from anywhere and you can maximize conversions
  • Customizable Checkout Pages - so you can design your pages to match your brand’s look and feel while also optimizing for conversions.

  • Drag-and-Drop builder - that makes it easy to create professional, high-converting checkout pages without needing any technical experience or knowledge of coding.

  • Upsells and Multiple Order Bumps - that will allow you to boost your average order value by seamlessly integrating more products that your customer can purchase. These features alone are proven to boost your sales by at least 50%.

  • Multiple Payment Options - SamCart will easily allow your customers to pay with many different methods like Credit Cards, Paypal, Apple Pay, and Google Pay. Plus, you can use alternative payment methods like Stored Credit Cards and Buy Now, Pay Later options through Affirm, Klarna, and AfterPay so your customers can pay any way they like.

  • Subscriptions and Memberships - You can easily manage and sell subscriptions, memberships, and recurring payments with SamCart. You can set up these different products in seconds.

  • Affiliate Center - You can run your own affiliate program and track commissions with SamCart.

  • Advanced Reporting and Analytics - Payment processors don’t have advanced analytics—they will simply show you how much money you’ve brought in. With SamCart you’ll get valuable insights into your sales performance. You’ll be able to track key metrics like the conversion rates of your checkout pages, upsell conversion rates, lifetime value of customers, and everything else you need to make data-driven decisions to optimize your online sales strategy.

  • And so much more!

This means you get all the positive security benefits of using a payment processor, PLUS you get all the advanced sales and conversion features SamCart provides. 

Conclusion

Using a payment processor is essential for running an online business. Choosing a payment processor is made easier by the fact that the top providers offer similar features and fee structures.

The key is to integrate your payment processor with a tool like SamCart, so you can easily optimize the payment experience for your customers. This will lead to an increase in sales and conversions guaranteed. 

When you try SamCart today, you will be able to set up a SamPay account as part of the account creation process.This allows you to streamline the setup process and get started quickly. 

Click here to start your free 7-day SamCart trial now and let us help you optimize your online sales process and boost your revenue. 

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