What is an electronic payment
Electronic payment is any method of money transfer that does not require cash or a paper receipt. Electronic payment processing methods include credit card payments, debit card payments, ACH transfers, digital wallet payments, and electronic transfers.
5 types of electronic payment
- Credit card payments
- ACH payments
- Direct debit
- Digital Wallet
- Bank transfers
Methods of processing electronic payments vary in cost, security, speed and ease of use for both sellers and customers. Knowing the pros and cons of the five popular payment methods will help you choose a payment processing system that meets the needs of your business.
Credit card payments
Paying with credit cards allows you and your customers to make purchases using a credit line provided by the credit card company.
The credit card company pays the seller for the purchase, and the cardholder either pays off the total credit card debt at the end of each billing cycle, or charges additional debt in the form of interest on the balance.
- In terms of purchases, credit cards are easy to use and can help business owners organize an accounting system. For example, you can open a credit line for operating expenses and issue cards to your COO and office manager, which they can use to pay for all operating expenses of the company. Linking this card to an operating expense account makes it easier to separate and track specific expenses.
- Accepting credit cards is also beneficial for business owners. Since many customers prefer to use credit cards, businesses that accept credit cards have a competitive advantage over those who do not accept them. Customers prefer to buy from companies that simplify the payment process by accepting their preferred payment methods.
- Most credit card companies charge merchants a credit card payment processing fee for each transaction, which can range from 2% to 5% of the total transaction value.
- Credit cards can also be expensive for cardholders if they do not repay the full balance of the card at the end of each billing cycle. The interest on the extended balance (calculated in the form of APR) is on average about 16%.
ACH payments, also known as ACH loans, are one of the common types of electronic payments.
ACH loans are sent through the Automated Clearing House (ACH) network, an electronic network that serves as an intermediary between financial institutions.
All ACH transfers are classified as ACH credits (payments) or ACH debits (withdrawals).
- ACH payments are secure and have a low transaction fee, usually from 20¢ to $1.50 per transaction, or from 0.5% to 1.5% of the total transaction cost. The payment processing fee is determined by your bank and calculated as a fixed transaction fee, as a percentage of the transaction, or as a monthly cost.
- Transfers, such as direct salary deposits, are often made free of charge.
- ACH transactions are processed in batches. This allows you to reduce commission fees, but can make ACH payments slower than other types of electronic payments.
- ACH credit transactions are usually processed within one to three business days.
Direct debit is a form of ACH transfer that transfers money from one bank account to another via the ACH network. Many businesses accept payments from customers through the ACH direct debit system.
ACH direct debit has a low commission per transaction, especially when compared to credit card processing fees – ACH debit fees typically range from 0.5% to 1.5% of the total transaction cost, while credit card processing fees range from 1.5% to 3.5% of the total transaction cost.
Businesses also often use ACH debit to pay bills: Recurring bill payments often do not require transaction costs and can be automated, which reduces the administrative burden and facilitates timely payment of bills.
ACH direct debit takes longer to process than many other types of electronic payments. ACH direct debit transactions are processed by the ACH network within one business day, but the receiving bank often delays transactions for another one or two business days, resulting in an average total transfer processing time of one to three business days.
A digital wallet is an umbrella term covering a variety of electronic payment methods (such as debit or credit card payments) stored on a user’s devices or in the cloud.
Digital wallets make it easier for customers to pay with debit and credit cards and at the same time increase the level of security, since your credit card number is not visible.
The tap-to-pay function on the iPhone, for example, allows customers to make a purchase without even having a card at hand.
The operation of digital wallets depends on a charged device (and sometimes on an Internet connection), and not all sellers accept payments using digital wallets.
For buyers, the presence of a physical credit card ensures that a discharged phone does not mean that it is impossible to make a purchase.
Bank transfers transfer money directly from one bank to another without using intermediaries such as the ACH network.
Bank transfers are usually processed within 24 hours (and sometimes instantly).
As a rule, they have higher limits per operation than ACH transfers. Transfer limits vary significantly from financial institution to financial institution, but ACH transfer limits are often limited to $10,000, while electronic transfer limits are often in the range of $100,000 to $250,000.
Bank transfers have a higher commission for each transaction than ACH transfers.
Although electronic transfers are a safe method of transferring funds between bank accounts, they are also more likely to be the target of fraud because they are processed quickly, which does not allow the company or the bank to stop a suspicious payment.
Electronic payment processing
Do you want to provide your customers with new payment options? A merchant account is what you need if you want to keep up with the changing trends in payment processes and expand your business at the expense of customers who prefer cashless payments.
Statistics show that non-cash transactions are in increasing demand all over the world.
Payment processing services are a set of financial services that help businesses accept credit and debit cards and other types of electronic payments through point-of-sale systems of physical (offline) stores.
They also allow online transactions to be carried out through a modern and secure payment gateway (without the physical use of a bank card).
Electronic payment processing is a prerequisite for any type of merchants who want to offer their customers goods and services with payment for them using electronic payments.
The account can be created by banks or trading account providers such as us, Wellcoinex. An uninterrupted and secure transaction process is a prerequisite for the electronic payment process.
Reasons why you need payment processing
In addition to the fact that your business will be able to accept all forms of payment using processing, there are additional advantages, such as the possibility of multi-currency transactions, improved cash flow and additional security. Let’s structure these benefits:
- The ability to accept various forms of payment, expanding your customer base, which leads to increased sales and a significant increase in business revenue.
- Manual operation can be time consuming. While accepting cash electronically reduces the payment process, and the ordering process for customers becomes fast and efficient. This increases the capacity of the outlet and increases the comfort for customers (there is no need to stand in queues), which will undoubtedly increase their loyalty to your store.
- By providing multiple payment options, you increase the convenience of customers and their satisfaction.
- Online shopping is booming these days. They owe their popularity to the convenience of payment provided by the technology of non-cash online payments based on a trading account.
Payment processing services from Wellcoinex
Wellcoinex offers a wide range of electronic payment solutions for many businesses, regardless of their size and type. Our ultimate goal is to give you the opportunity to expand your business. Our team understands the goals and requirements of your business and offers you customized payment solutions.
Wellcoinex will help you connect with your customers by providing modern and secure payment processing solutions that are simple, convenient and affordable.
Wellcoinex technologies help protect your own or third-party trading accounts and ACH Payment Processing accounts (electronic transfers from one bank account to another using an automated clearing house) for businesses.
Accepting bank cards and other forms of payment is the key to a long and successful business.
Good payment processing deals are hard to find.
Wellcoinex offers you trading accounts and ACH processing options for companies of all business categories.
Our team conducts a thorough study of all the requirements related to the category of your business in order to offer the optimal package of services. Our trading services include online services for accepting electronic payments in various ways, including credit cards, ACH and real-time bank transfers based on network banking.
Usually, Wellcoinex can connect you to several banks, card and payment networks that are gaining momentum.
But in many cases, we fully manage these technical connections and take over the relationship with the external network and bank accounts. This makes the owner of a trading account from our company less dependent on financial institutions. This is especially important if sales are carried out worldwide.
By allowing a business to do business with one payment company (which already has relationships with acquiring banks around the world), you can save a huge amount of time and effort that would be required in the case of establishing trust relationships with several financial institutions.
We also offer processing solutions for companies that require services for processing payments made via the Internet, pos terminals in retail outlets / retail stores, as well as those carried out when ordering goods by phone or mail (MOTO payments).
What is a merchant account provider?
Credit and debit cards have become the preferred payment method in today’s market, so a merchant account is vital for the vast majority of businesses.
Since consumers want the purchase process to be as simple and optimized as possible, giving them the opportunity to pay for the purchase in any way convenient for them has a beneficial effect on expanding the circle of the target audience, increasing its loyalty to the company.
Wellcoinex is a provider of trading accounts with extensive experience in creating them for companies of various business categories.
We have an extensive network of contacts with acquiring banks around the world, which allows us to provide our customers with extremely competitive prices.
It also allows Wellcoinex to work with a wide variety of companies, not just those that are suitable for traditional industries. These may be companies engaged in a business that is often regarded as “high-risk”. This is, for example, the sale of pharmaceutical products or sites that provide online dating services.
How can I get processing for my business at Wellcoinex?
The first step to obtaining payment processing for doing business is to fill out and submit an application form. It should contain the following information:
- The URL of the company’s website.
- Detailed information about the company (including information about directors and shareholders).
- Bank details for carrying out the necessary credit checks.
- Technical characteristics of the site (for example, information about the server on which CMS it was created).
- Detailed information about the products or services provided.
- Information about customer service.
What payment options are needed – payment by bank cards, in which currencies, the use of electronic money, MOTO payments, etc.
- Trading accounts for offline and e-commerce
- A high-risk trading account
- Trading accounts of third parties
- Credit Card Processing
- Processing ACH payments and receipts
- Real-time credit transfers via Internet banking for SEPA (EUROPE) and the UK.
- Mobile payment processing
- Payment gateways
- POS terminals
- Integration with shopping carts in online stores.
Electronic payments FAQ
What are electronic payment systems? How do they work with payment service providers?
Electronic payment systems allow businesses to send and receive electronic payments. A payment service provider (such as PayPal, Square, or Shopify) may allow you to accept credit cards and payments through a digital wallet.
Is it easy to set up electronic payments?
Setting up an electronic payment system is not difficult, and perhaps your existing accounting software already offers the ability to accept electronic payments. Setting up with a third-party payment processor, such as Venmo or Square, usually involves giving your bank account number and route number to the payment processing partner so that funds can be credited to your account.
What is an example of an electronic payment?
Recurring electronic transfers from your bank account to pay bills are an example of electronic payments that are made through the ACH network. Making payments with a credit card is another form of electronic payment.