Accept Online Payments with Noda
Accepting payments online is not a luxury anymore but an essential prerequisite of building a successful business, especially after the Covid-19 pandemic. With global e-commerce sales expected to reach $ 8.1 trillion by 2026, according to Statista, the importance of integrating robust payment systems is clear.
Here we take a look at how online payment processing works, and outline the best ways to accept payments online in 2025.
What is Online Payment Processing?
Although online payment processing may appear simple to customers, there is a complex system at work behind the scenes. Multiple entities are working seamlessly to ensure secure and efficient transactions.
- Payment Gateway: This software application serves as a secure intermediary between the online shop and the payment processor. It ensures that customer payment data is safely captured and transferred. It functions similarly to a physical point-of-sale terminal in a brick-and-mortar store.
- Payment Processor: This is a company that handles the transaction process on behalf of the buyer and seller. It plays a crucial role in verifying payment details, detecting fraud, and facilitating the transfer of funds between both parties' bank accounts. To authorise and settle payments, the payment processor communicates with the merchant's bank (merchant account) and the customer's bank (issuing bank).
- Merchant Account: This is a specialised bank account that enables businesses to accept payments, specifically credit and debit card transactions. When a transaction is approved, the funds are first deposited into the merchant account and then transferred to the business's primary bank account.
How to Accept Online Payments
In the world of e-commerce, businesses have numerous options to receive payments from clients. Each option offers unique advantages and caters to different customer preferences.
Online Payment Service Provider
Payment service providers (PSPs) allow businesses to collect payments through a single platform. By integrating a PSP, businesses gain access to a wide range of payment methods, including credit and debit cards, digital wallets, and payment links.
Additionally, PSPs prioritise secure payment processing, ensuring the protection of customer data and financial information. The unified platform streamlines transaction management, reporting, and compliance processes for businesses while reducing operational burdens and facilitating smooth financial workflows.
ACH and SWIFT Transfers
Automated Clearing House (ACH) and Society for Worldwide Interbank Financial Telecommunication (SWIFT) transfers offer secure and direct ways of moving funds between bank accounts.
However, there are potential drawbacks to consider. ACH transfers may have slower processing times, while SWIFT transfers could come with higher fees that might discourage small-scale customers and impact the overall international transaction experience.
Email Invoicing and Billing
Email invoicing and billing offer simplicity and convenience, allowing businesses to send invoices directly to customers' email addresses.
However, challenges arise in this method with a higher chance of phishing scams. Additionally, integrating the invoicing system with the financial management system is crucial for accurate reporting and minimising discrepancies.
Payment Options for Small Businesses
Small businesses face unique challenges when establishing a seamless payment processing system. Overcoming these hurdles requires a combination of technological understanding and strategic planning.
Integrating a reliable payment processor may be one of the easiest ways to accept payments online for small businesses, as they offer a variety of payment methods. For those without a dedicated e-commerce platform, payment links can be a game-changer, allowing transactions to take place through email or social media. Additionally, it's important to consider mobile payment options and prioritise a secure and user-friendly checkout process.
Types of Online Payment Methods
For businesses operating in the digital transaction ecosystem, there is a wide range of online payment methods available. Typically, these payment methods would be offered to a business by a payment processor.
Digital Wallets
Digital wallets, or e-wallets like PayPal, have emerged as a dominant force in the online payment spectrum. In 2022, for example, digital wallets were the most popular payment method worldwide, overtaking credit and debit cards. Meanwhile, according to a study from Juniper Research, the value of digital wallet transactions is expected to rise from $9 trillion in 2023 to over $16 trillion in 2028, amounting to 77% growth.
Credit & Debit Cards
Credit and debit cards have long been essential in online payments, offering convenience, speed, and widespread acceptance. Although giving up the dominance to digital wallets, credit and debit cards are still among the most used payment methods worldwide.
Mobile Payments
Mobile payments have become increasingly popular in the online payment industry due to their convenience, speed, and accessibility. By utilising mobile devices, customers can quickly and securely make transactions through mobile wallets such as Apple and Google Pay.
Payment Links
Payment links represent a versatile and user-friendly online payment method, enabling businesses to send a link via email, SMS, or social media, through which customers can make payments. This method is particularly advantageous for businesses without a dedicated e-commerce platform, as it allows them to facilitate online transactions without necessitating a website checkout page.
Learn More About Open Banking with Noda
How to Accept Online Payments in 2025: Step-by-Step
Choose a Payment Processor
It's essential to select a processor that aligns with your business model and meets your customers' payment preferences. Make sure the processor supports various payment methods, such as credit cards and digital wallets, to accommodate the diverse financial habits of your clientele. Additionally, consider factors like transaction fees, security protocols, and customer support availability when choosing a processor for your business.
Set up a Merchant Account
A merchant account acts as a digital safe, handling and transferring funds from online transactions. By adhering to strict security standards like PCI DSS and implementing strong encryption methods, you can protect transaction data, build trust with your customers, and strengthen your overall digital transaction system.
Customise Payment Gateway
The gateway acts as your virtual cashier, facilitating and ensuring smooth financial transactions. To enhance customer satisfaction and optimise the transaction process, it's essential to customise the checkout experience, making it user-friendly and intuitive.
Test Your Payment System
Before introducing your payment system to the public, it is crucial to undergo a thorough testing phase. This guarantees that all payment methods are compatible, transactions are securely processed, and every digital payment reaches its intended destination accurately.
Monitoring and Optimise
The process doesn't stop once your system is up and running. Continuously monitoring transactions allows for seamless operations and provides valuable insights into areas that can be improved. Additionally, analysing transaction data to understand customer preferences and behaviours allows for optimising pricing and payment strategies. This ensures that your system remains relevant in an ever-changing digital payment landscape.
Accepting Payments with Noda
Elevate your business with Noda’s payments and open banking solution. Our all-in-one platform prioritises customer understanding, efficient operations, and growth.
Noda is a worldwide payment and open banking provider for seamless business transactions. From payment facilitation and AI-powered financial analytics for businesses to customer clustering and user-friendly verification, Noda has got you covered. Our platform uses cutting-edge AI and machine-learning technologies. Your payments are our priority.
FAQs
What is the best way to accept payments for small businesses?
For small businesses, the most effective approach to accept money online is to integrate a trustworthy payment processor that offers various payment methods.
What is the cheapest way to accept credit cards online?
For businesses looking for the best way to accept credit cards online, it's important to find a payment processor that offers low transaction fees and minimal setup costs. Comparing different processors is key to finding one that balances affordability with reliable service.
Which payment option is not accepted online?
Online transactions typically require electronic payment methods such as credit cards, digital wallets, or bank transfers. Physical checks and cash are not commonly accepted since they are not compatible with the digital nature of online payments.