Online Payment Processing
Basically, the term payment processing refers to the transfer of money from a debt by the debtor to a beneficiary or other legal entity recognized by the beneficiary. Online payment processing is of great importance in the everyday lives of consumers as well as in the business world, and this importance is likely to increase even further in the future. International payment processing in particular is likely to become more important now that private customers are also increasingly shopping in foreign online stores. This is because somewhat different requirements apply to international payment processing than, for example, to payment processing when shopping in a local store.
Payment processing
When processing payments, also known as payment transactions, a distinction is made between the following three forms:
- Cash payment
- Semi-cash payment
- Cashless payment
Online payment processing runs differently for these three forms:
Cash payment proceeds directly and immediately between the buyer and the seller of a good, without either party needing an account to transfer funds. In this case, the seller hands over banknotes or coins to the vendor of a product or a service provider in direct exchange for the product or service in question. Letters of value and postal services are also classified as cashless payment processing.
In semi-cash payment processing, one of the two parties involved in the payment transaction requires a bank account. This can be in the form of a cash deposit or a cash withdrawal from the account in question. Semi-barter payment can be made through various payment methods such as payment slip, cashier’s check or traveller’s check. Probably the best known form of semi-cash payment is cash on delivery, which is offered as a payment method by almost all online stores. In this case, the payment is processed as follows: The parcel carrier hands over the package and collects the purchase price including shipping costs. The cash collected is then transferred to the store operator by the shipping service.
In cashless payment processing, the payment of the respective amount is made via the two accounts of the contracting parties. The actual payment transaction is carried out in one of the following ways:
- Bank transfer
- Direct debit order
- Direct debit
- Crossed check
- Bill of exchange
Regardless of the payment method chosen by the parties involved: Payment processing always follows the same principle: the payer’s account is debited with the corresponding amount, while the amount is credited to the recipient’s account. All payments by credit card, EC card or PayPal are also counted as cashless payments.
What is the most common method of online payment processing?
Both business and government prefer cashless payment processing because it can be handled most efficiently. In the case of private households, however, cash payments still predominate in German-speaking countries. However, the number of payments processed via credit cards has been on the rise for years. Larger sums are usually settled by bank transfer. The situation is different in the USA and Canada, where even private households hardly use cash anymore.
In principle, every form of payment transaction is documented. In the case of cash transactions, this is done in the accounting records. For all non-cash transactions, account statements are the best-known form of documentation. In addition, every transaction is also documented. A distinction is made here between voucher-based and voucherless payment processing. In the latter case, there is only documentation in electronic form.
