Payment online by credit card (Part 2)

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Have you ever wondered why, when buying goods in one online shop, at the time of payment, you pay for your purchase directly in just a few simple steps in the online shop where you placed your order, while in other shops, after having added your chosen goods to the cart, you are asked to fill in a form with your personal data and then, when you click on the “Confirm” button, you are sent to a secure bank payment gateway or to some other payment system? How many times, after having confirmed your order, have you suddenly found yourself on a strange page, outside the e-shop where you made your purchase, with different graphics to the normal pages of the e-shop, where you have probably been asked to fill in all the fields with your personal data again and then with your credit card data?

In these situations, have you ever wondered whether what you were doing was really alright and, above all, if you were really paying for your purchased item?

Why do these situations happen? What do they depend on? Can we have confidence in these payment methods?

Let’s have a look together !

An online shop can use many different methods to implement a credit card payment system. There are many solutions even though the buyer usually doesn’t notice much difference between one system and another:

1. Payment by credit card directly on the server of the virtual shop (this is usually a secure system, which is used by the most famous and biggest companies with a considerable turnover).

In this case, the buyer will make his purchase and, after having added his product to the cart and filled in the page with his personal data and the shipping address, he will enter his personal credit card data within the website of the e-shop, because the payment gateway is located on the secure server of the e-shop itself (however, don’t forget always to check that the address of the webpage starts with https://)

2. Payment by credit card on the bank’s secure server, to which, the buyer will immediately be transferred once he confirms his order.

After having confirmed the order and clicked on the “Checkout” button, the buyer will automatically be sent to the secure server (SSL) of the bank where he will be asked to enter his credit card data and, once the payment has been made, the buyer will immediately be sent back to the pages of the online shop. In other words, the payment is not made on the website of the shop but directly on the server of the bank.

3. Payment by credit card on independent Payment Gateways (Third Party Processors) which offer the shop a credit card payment service. Some virtual currency management systems  belong to this category and offer the option of paying directly by credit card without needing to create a specific account, like the payment method offered by PayPal.

This solution is, for the buyer, very similar to the previous one, as in this case too, the payment is made on a separate server outside the e-shop.

All these three solutions explained above, seem quite secure and, for the customer, choosing one method rather than another makes no difference, while, for the vendor, there are many differences between these three systems of payment, but we have decided to write a separate in depth article on this subject (so, don’t miss our next posts!!!!)

Why does one shop prefer to use a credit card payment system within its own server, while on the other hand, other shops decide to rely on external payment systems?

It depends mostly on the volume of a company’s turnover, on the quantity of sales, on their cashflow and whether or not they employ technicians who are able to implement and manage the system. Managing a payment gateway on one’s own website, is a big responsibility for the seller, because all the payment data will be entirely managed inside his own server. This operation is also very demanding from a technical point of view.

For a smaller company, it is certainly easier and, probably also better for the customer’s security, to rely on services managed by experienced third parties, so the company does not have to be involved in the technical problems concerned with the many payments on the system.

But, returning to the three credit card payment methods outlined above, we can say that:

• The first method offers the vendor better control over each transaction because he has all the necessary information such as the data of the credit card holder, the IP code of the computer used to place the order and make the payment (all this data will be then filed on the server of the e-shop) so he can decide the level of security of each transaction. However, it is a very expensive process (even though the percentage on each transaction is certainly lower than the percentage usually required by the other payment solutions); besides which it is not very easy to do from a technical point of view, because it is necessary to guarantee the security of every single transaction made.
• The third solution is certainly the simplest and the most economical one, as an investment (lower fixed costs than the Banking Gateway solution) and it is therefore the best option while the volume of sales is still low or if the business is just starting up and there isn’t yet enough capital to invest. This solution is also very secure for the buyer and very simple to implement. In this case, however, the seller does not have any kind of control over the transactions and he will never know the personal data of the credit card holder or the data of the credit card itself, but only gets to see the results of these transactions and, sometimes, if the transaction should turn out to be a fraudulent payment, he is obliged to refund the credit card holder, even if he has already shipped the goods.

4. The buyer places the order but he doesn’t proceed with the payment immediately. After having received the order, the vendor prepares a link for the payment that he will then send to the buyer via e-mail, or, as often happens, the seller even prepares a web page for the payment, which can only be accessed by the purchaser (following one of the three payment methods explained here) in order to enter his own credit card data and make the payment online.

In this way, it is easier for the vendor to control and manage every single order accepting or refusing the payment by credit card.

5. The credit card data is directly collected and managed by the vendor who will then proceed manually with the payment (always choosing one of the three payment options shown above). It is possible to obtain the data over the phone, via e-mail or through the vendor’s website.

We personally suggest that you to make the payment directly by credit card entering your data into a secure payment system yourself, without entrusting your private personal data to other people.

However, this last option could be more convenient and practical for some people. In this case, please distrust e-mails and, if you really have to communicate your personal and credit card data, we suggest that you do it over the phone, so that the shop operator can proceed with entering your data and with the confirmation of your purchase in real time, without needing to write your private information down on paper where anyone could see it. On the other hand, if you prefer to leave your data on the page of the online shop, so that the seller can enter it manually (your data, once it has been entered and processed, will be filed on the shop’s server), we suggest that you pay attention to the web page address. It very often happens that e-shops inadvertently activate this option and, as their shops do not have secure servers for this page, it is possible that your data could easily be accessed by fraudsters and hackers. Don’t ever forget that the address of a secure page must always start with https:// and not with http://!

In some circumstances, the vendor might ask you to send a copy of your credit card (of both its sides) via fax, together with a copy of your identity document. In our opinion it is not a good idea to give someone a copy of your credit card but sometimes it is very necessary if the vendor needs to be sure that the credit card used is really genuine and, above all, that it belongs to the person wanting to make the payment.

Why does this happen? We’ll explain it to you immediately!

Usually, when the customer proceeds directly with the payment, the vendor is always able to check on the payment, through the IP of the computer used to access the web site, and to make more specific security checks. When, however, the data is being entered directly by the vendor, or it is the first time that the customer makes a purchase in a certain shop, it is very difficult for the vendor to check that the payment is proceeding properly, so he needs to collect as much information as possible concerning the transaction, in order to avoid any problem or risk.

In conclusion, what can we say the credit card payment method in an online shop?

1. It is quite a secure method of payment as long as you respect some simple rules (the ones we talked about in the first part of the article);
2. It is an immediate method of payment. The payment confirmation almost always arrives very fast and the order can be confirmed immediately.
3. This method of payment is completely traceable, and you can ask to be refunded at any time, if for example, the purchased product doesn’t arrive, or if the shipped goods don’t correspond to the description of the purchased items.
4. This method of payment is guaranteed, thanks to the high traceability of each transaction and to the possibility of initiating a chargeback (very often, even when the customer isn’t 100% right, the bank offers him its total support, allowing him to return the goods within the limits imposed by the laws regulating online commerce). Shops therefore have to pay great attention to every step of the sale of an item, from the description of the item itself to its despatch, in order to avoid any future problem.

And, if you have made an online payment but it hasn’t gone through successfully, what could have happened? What could it depend on? Is it the payment system’s fault or is there something wrong with your credit card? How can you tell what the problem is?

We will discuss this subject in our next article. Don’t miss it!!!!!