How to accept online payments: Ways and methods in 2021

Accepting online payments is the easiest way for customers to pay for your products and services. But for you - as a merchant, it's also the most precarious. Customers abandon their shopping cart at an average rate of almost 70% due to several reasons, including trust, complexity, and a lack of payment options. 


With such a high percentage of sales abandoned at the checkout, understanding and optimizing your payment experience is now critical to your success. This post will help you better understand the fundamentals and explore the different ways and methods to accept payments in 2021.


What is an online payment?

Accepting payments online for goods or services may seem like a straightforward process on the surface, but it’s actually quite complex. For your business to succeed and handle any problems that may arise, it’s essential to understand the basic elements that work behind the scenes to enable payments to be processed. 


Payment gateway

A payment gateway is like the online equivalent of a point of sale (POS) terminal. It’s a software application on a merchant’s website that enables online payments to be processed. Payment gateways capture and send credit card data to a payment processor and communicate approvals or rejections to you and your customers.


Payment processor

A payment processor takes the credit card information inputted by a customer and sends it to the credit card network. The card network then checks for fraud and to see if the customer has the necessary funds to make the purchase. The processor then sends an approval or denial back to you, the merchant. If approved, the processor communicates with the credit card network to go back to the customer’s bank, collect the transaction and deposit the money into your account. 


Merchant account

A merchant account is a business bank account that allows merchants to accept customers' debit and credit card payments. In the past, opening a merchant account was a requirement to accept online payments. Today, it's possible to accept credit and debit card payments without having to apply for a merchant account using a third-party provider known as a payment aggregator. 

How do online payments work? 



  1. A customer chooses an item to purchase and enters their card details on your checkout page.  
  2. This card information is sent to the payment gateway, which transfers the information to the payment processor.
  3. The payment processor transfers this transaction information to the credit card network to verify the customer’s details are correct.
  4. The card network then requests authorization to release the funds with the customer’s issuing bank. After checking for sufficient funds in the account and verifying that the transaction isn’t fraudulent, the issuing bank submits a response to the credit card network that indicates whether or not the transaction has been approved.
  5. This information is then sent to the payment processor, which requests funds from the issuing bank. Funds then get transferred to the merchant account and then onto the business’s bank account by the payment processor. 

What are the different types of online payment methods?


The payment ecosystem is getting more fragmented by the day. Achieving higher approval rates and conversions now requires you to offer your customers their preferred local payment methods and have the capacity to add new payment methods as they arise. Here is a list of commonly used payment methods.

Credit and debit cards 

According to a European Payments Council study, 86% of customers make online purchases via credit or debit cards. More than 60% consider it their favored payment method when making a purchase. While it's possible to accept credit card payments online without any monthly or initial setup fees, you'll need to pay transaction fees whenever a credit or debit card gets used as payment. Popular credit cards include Visa, Mastercard, American Express and Discover. 

ACH Processing [e-checks]

Credit cards are a convenient way to pay for things, but they also come with expensive fees. This isn’t the case with eChecks. Paying with an eCheck is like paying with cash. Money is transferred to the merchant when the customer authorizes and delivers their payment to the bank. No credit card interchange fees apply for eCheck acceptance, and fees are also generally low. 

Mobile wallets

A mobile wallet or digital wallet is a software that stores customers’ credit card or bank account information. Customers can then use that information to purchase with less friction. There’s also no need for them to pull out a credit card or search for their bank account routing number and manually enter their payment details. Ultimately, this results in better conversion rates due to lower checkout abandonment. In the US, it’s forecast that approximately 54% of all e-commerce sales will be generated via mobile devices by the end of 2021.

Email Invoices

Email invoices help speed up payments and are great for service-based companies. Once an email invoice gets sent to your customers, all it takes is a couple of clicks to make a payment.  

Pros and cons of accepting online payments

Pros Cons
Reach a global audience Increasing cost of fraud
Reduced transaction costs Downtimes
Payment security Service fees
Payment method acceptance Technical problems
Optimized customer journey


Pros and Cons of the online payment methods:

Payment method Pros Cons
Credit/debit cards - Convenient
- Widely accepted
- Fees
- Fraud and security
ACH Processing-
e-checks
- Low fees
- Lower risk of chargebacks
- Popular with businesses
- Complex processing and tech
Mobile/digital wallets - Reduced friction - High fees
- Low adoption rates in some markets
Email invoice payments - Faster payments
- Automated
- Save time
- Security
- Spam filters



How to choose a payment provider

Choosing the right payment provider for your business can be difficult. There are several factors to consider which can quickly make the selection process overwhelming. Before beginning your search and narrowing down your options, make sure to understand your immediate and longer-term business needs. Once you have this information, you can start looking at what different providers offer. To make your decision easier, here are a few key questions to consider.

Which markets does the provider operate?

The provider you choose should enable you to operate in the primary market(s) you want to serve and those you wish to target in the future. This might be the US, EU, UK, Australia, China, or South America.

What payment methods and solutions are supported?

Today's customers are picky about how they pay. They want to have multiple choices and experience a fast, convenient checkout experience. It's therefore critical to understand whether a payment provider supports the necessary payment methods that suit your business needs. The provider should offer the most popular local payment methods in each of the markets you operate such as credit/debit cards, mobile wallets, or e-checks.

Does the provider enable you to customize your checkout experience?

To boost your brand, achieve a frictionless payments experience, and ultimately increase conversions, you need the ability to customize your checkout. There are many ways this can be done including editing the design, adding or eliminating features, adding payment methods, changing text, removing/adding fields, etc. Ideally, you’ll want to find a provider that enables you to define the look and feel of your checkout experience, conduct a/b tests and make adjustments until you find the highest converting configuration. 

What risk management tools does the provider offer?

While it’s great to be able to accept payments from around the world, there are significant risks involved around data protection, security and compliance. With substantial complexities and costs involved, it’s best to use a provider that offers

strong verification, fraud detection and chargeback protection tools to help stay compliant, minimize fraud and keep your customers’ financial information as secure as possible. By doing so, you’ll reduce costs and help avoid financial or reputational damage. You’ll also save time by offloading the burden of having to deal with compliance and fraud-related issues yourself.

How difficult is integration?

Providers have different integration processes with varying levels of complexity. Some require you to hire developers or keep an in-house development team to integrate it successfully in line with your core business systems and requirements. Others enable merchants to get up and running quickly with little to no code in just minutes. Whatever provider you choose, just remember that dealing with integrations and maintenance can become a major headache that drains resources and slows the time it takes to launch in new markets. It's best to find a flexible provider that's easy to integrate and one that lets you get up and running quickly like Pay.com.

What reporting and analytics capabilities does the provider offer?

Transactional data provides valuable insights that can help you increase sales and improve your payments experience. The best providers offer access to an easy-to-use and consolidated analytics dashboard that delivers in-depth insights and reporting on your entire operations. You should be able to analyze conversion rates, track sales by product, region, currency or payment type, show where fraud, chargebacks, and refunds are occurring, build custom reports and much more. Ultimately, the more sophisticated the analytics, the more you can optimize your payments and see which areas need to be improved to increase revenue. 

What are the fees and costs?

Providers generally charge either a transaction fee or an interchange fee. A transaction fee is usually a percentage of the total cost of a transaction, while an interchange fee is a fee paid by banks for the acceptance of card-based transactions. Some providers also charge setup fees, usage fees, and monthly service fees. Ultimately, you need to determine the total monthly costs of a payment solution and decide whether that’s acceptable for your business. This means calculating the total fees for everything mentioned above plus the cost of currency conversions, chargebacks and dispute management.

What level of support can you expect?

The best providers will always be there to offer help. It’s essential to establish what level of support you can expect during setup and in the long term. Does the provider offer ongoing support? How responsive is this support, and what methods of contact will be available? Will you have a dedicated account manager? 

What’s the best way to accept payments online?

The best way to accept online payments depends on variables particular to your business such as your target market, software integrations, price, the number of products you sell, and how you sell them. That’s why it’s critical to first understand your business and customer needs before committing to a provider. 


Pay.com is a plug & play payment gateway that empowers businesses to adopt the latest payment technologies and expand to new markets. It provides a lightning-speed gateway service with complete control over customizing checkout pages, a/b testing features, and fraud prevention filters. To find out more, contact our sales team.


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