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The benefits of end-to-end payment processing
Processing payments can be difficult, particularly for online merchants that are just beginning to deal with the complex payment landscape.
Although payment transactions are typically processed in seconds, much goes on in the background to ensure everything works properly. Behind the scenes, a number of parties, including the payment gateway, the acquiring bank, the issuing bank, the card network, and the ecommerce merchant, work together to make certain that payments are made quickly and securely.
In an ideal world, payments should pass from one party to the next seamlessly. However, the fact that there are so many players in the mix can cause transactions to be delayed or fail altogether, leading to dissatisfied customers who will likely take their business elsewhere.
Ultimately, online businesses must figure out how to better manage processing payments while ensuring that each customer has an exceptional experience.
The best way for an ecommerce company to do that is by implementing an end-to-end payment processing system.
What does end-to-end payment processing mean?
End-to-end payment processing systems let online companies manage their payment processes from beginning to end in one place. These systems bring all the information involved in processing payments into one comprehensive view, giving ecommerce businesses full visibility over these processes.
And since customers use a variety of payment methods, online merchants need to work with a solution provider that can process and centralize all these payment methods on the same platform. An end-to-end payment processing system should scale automatically, allowing companies to handle large volumes of cards at any time.
Although many payment processors claim they offer comprehensive, end-to-end payment solutions, not many can deliver on that claim. The businesses that can provide ecommerce companies with real end-to-end payment processing offer innovative technologies and enhanced service for their customers. These payment processors also allow ecommerce merchants to process every transaction no matter the channel as well as help increase sales and conversion rates and reduce risk and fraud.
Providers of end-to-end payment processing systems differ from those that just offer backend payment processing. A backend payment processor provides merchants with the services and infrastructure they need to process customer payments. Consequently, online merchants that just need credit card processing could partner with backend payment processors. But to process payments from beginning to end, merchants should team up with providers that offer end-to-end solutions.
In addition, while some banks may offer payment processing services, keep in mind that processing payments is not a bank's core business. Payment service providers (PSPs) differ from banks in that they are more modern businesses, dedicated specifically to moving money around. They are also focused on improving the end-to-end payment experience. As such, online merchants will see many benefits from leaving payment processing to specialist service providers, rather than to their bank.
How end-to-end payment processing works
There are a number of elements involved in an end-to-end payment processing system; however, the four main ones are:
- The merchant: the online business that accepts cards to make sales.
- The acquirer: the financial institution that handles a merchant's account and moves funds on behalf of that merchant, enabling it to accept payment for goods and services.
- The cardholder: the customer who uses a card to make purchases.
- The issuer: the bank that issues credit and/or debit cards to customers.
Card schemes (card networks), including Visa and Mastercard, are the central payment networks that manage credit and debit cards to process payments. Typically, card networks and issuers work together to process transactions; however, sometimes, a card issuer is the same as the card network, as is the case with American Express.
However, other parties play an equally important role in accepting card transactions online. These are the:
- Payment gateway: the technology that lets ecommerce businesses accept online payments. The payment gateway captures customers' card details and sends that information to the payment processor.
- Payment processor: the provider that connects the merchant's acquiring bank and the cardholders' issuing banks to the card schemes. Additionally, the payment processor connects acquirers with banks to settle merchant funds, and it also connects issuers with banks to take payment for credit card transactions.
This is how end-to-end payment processing works.
The cardholder enters their card information into the online merchant's checkout page and clicks pay. The merchant’s payment processor then sends these details to the merchant’s acquiring bank.
The acquiring bank forwards this message to the relevant card network, which passes it to the cardholder’s issuing bank. The issuing bank then has to authenticate the transaction, i.e., ensure the cardholder is who they say they are, and authorize the transaction, i.e., check that the cardholder has the necessary funds in their account.
If the cardholder is legitimate and has the funds, the issuing bank confirms this to the card network, which passes the approval response to the merchant's acquiring bank.
Finally, the acquiring bank passes this message on to the ecommerce merchant, which confirms a successful payment to its customer and sends the goods or provides the service.
Benefits of an end-to-end payment solution
An ecommerce merchant that selects an end-to-end solution that acts as an acquirer, gateway, and processor all in one can be assured that its transactions will be processed faster and more accurately, helping boost its acceptance rates and improve the business.
Online companies that choose end-to-end payment processing solutions can realize such benefits as:
Increased acceptance rates
A solution provider that acts as the gateway, acquirer, and processor all in one better understands the type and format of the messages that have to be sent to the customer's issuing bank. This will increase the chances that it will approve the transaction, boosting the online merchant's acceptance rates.
Additionally, since there are no third parties or intermediaries involved, more data will be carried in the transaction message, again ensuring that issuers will be more likely to authorize transactions.
Total access to data
An end-to-end single-source payment processing system, such as Checkout.com, offers ecommerce merchants easier access to the data they can use to operate more efficiently. Merchants can also use this data to research payment trends.
Additionally, when payments aren't authorized and transactions are declined, merchants can use the numerous response codes their payment processors provide to identify the reasons and fix them, so they don’t happen again.
Having one centralized system makes it easy for online businesses to consolidate all their reporting needs into one location. That enables merchants with multiple sales channels or locations to access the data they need to track and review all their transactions. This way, they can keep tabs on their sales more efficiently as well as manage their inventories and overall business performance.
More consistent reporting allows merchants to identify trends, helps improve business performance, and makes it easier for them to locate the necessary data to deal with chargeback disputes.
Easily build their risk strategies
Many PSPs help merchants fight fraud while still boosting their approval rates by offering fraud management tools. For example, Checkout.com allows merchants to apply risk scoring and routing logic with its easy-to-use payment fraud detection solution. This feature supports secure transactions using 3D Secure, tokenization, and customizable fraud settings.
End-to-end providers offer merchants flexible and reliable technology that scales and adapts as their business needs change.
For example, Checkout.com offers one integration, so online companies can immediately access all the changes and updates it makes to its flexible and modular platform and then adapt those changes and updates to align with the needs of their companies. With easy-to-understand documentation, APIs, and sandbox tools, ecommerce merchants can build their ideal payments solution once and add new markets as needed.
Speed and stability
Checkout.com’s data-rich, modular payment technology is ideal for an agile, global business that's looking to innovate on its payments journey. Legacy payment processing systems, such as those offered by banks, simply can’t scale with those businesses. However, Checkout.com's payments solution makes it easier for online merchants to move money more freely.
One of the main reasons ecommerce business owners use end-to-end payment processing solutions is because they can save money. Involving numerous third parties in payment processing only increases operating expenses — expenses that are passed on to the merchants. Not only that, but the more intermediaries that are involved in payment processing, the more sensitive data changes hands, which increases the risk of fraud.
However, with just one company handling the entire payment process, sensitive data passes through fewer points of failure, making fraud less likely. Additionally, it can be difficult to track down the origins of any problems that may occur because of the numerous vendors involved when an end-to-end solution isn’t used.
Enhanced customer experience
A full stack solution makes it easier for merchants to track customer payments to learn about their behavior and anticipate what they might purchase in the future. Also, the enhanced layers of reporting allow merchants to set up customer profiles that they can use to generate promotions, loyalty programs, and marketing offers that affect customers’ buying behavior and help boost revenue.
Providers of end-to-end solutions are able to meet constantly evolving customer expectations and stay a step ahead of the competition. Customers will receive the same fast and seamless experience whether they make payments online, through mobile point-of-sale systems, or in-store.
End-to-end solutions allow businesses to run more efficiently, which leads to a smoother customer experience. This, in turn, increases the speed and volume of merchants' payments, reduces customer frustrations, boosts customer retention, and leads to more sales and increases in revenue.
Full stack payment solutions also cut down on the time it takes for merchants to manage their transactions, which frees employees to do more value-added work. In addition, the end-to-end processors are able to handle any issues that may come up.
This means that merchants don't have to spend time dealing with these problems, which reduces the risk of costly delays that can frustrate their customers.
Does Checkout.com offer an end-to-end solution?
Yes. From the outset, Checkout.com has offered an end-to-end payment processing solution. As a one-stop payment processing, acquiring, and payment gateway resource, Checkout.com provides you with authorization rates, settlement, and complete access to data.
Because we've built our own integrations rather than going through external processors, our merchants get a unified experience. Built with all the benefits mentioned above, Checkout.com is able to quickly deploy services for merchants.
Checkout.com is built for speed around your business needs, all supported by dedicated local teams with expertise in every major market worldwide.
Owning the completed payment process also means data can flow seamlessly through the platform, beginning when a merchant submits a transaction and continuing through to when that transaction goes through risk filters, 3D Secure authentication, card schemes, and back again. Importantly, the data doesn’t lose integrity throughout this process. In fact, Checkout.com can identify opportunities to enrich the data so that transactions are always processed more efficiently and at lower costs.
While some online merchants using legacy payment providers may need to integrate with several different platforms, with Checkout.com, there's only one integration into a single API. Ecommerce merchants can access global pay-in and payout solutions through this one integration, and Checkout.com can route those transactions to multiple global connections from our single platform.
You can learn more about our end-to-end payment processing solution on our payment processing product page.
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September 29, 2023
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