Building a successful online business is a journey ripe with both challenges and rewards. From the initial step of building an eCommerce website to everything that goes into managing and scaling your business, the ‘to-do’ list for entrepreneurs can feel endless.  Among these tasks, establishing easy and secure payment methods for your customers stands out as essential—at the end of the day, your business relies on it. And, let’s be honest: getting yourself paid is one of the fun parts of running a business. 

However, navigating the world of eCommerce payment processing can be complex and overwhelming, especially if you're new to the game. In this guide we’ve put together the essential information you need to help you make informed decisions when starting a business online, as well as a list of the best online payment solutions to optimize your payment setup for success.

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What is eCommerce payment processing?

Ecommerce payment processing is the system that enables your online store website to accept and manage payments. It involves the secure transmission of payment data between customers, merchants and payment service providers.

There are many steps that occur behind the scenes as a part of payment processing on an eCommerce website. When a customer makes a purchase from your site, the process begins when they select the payment method they’d like to use. 

Want to expand your business and reach new customers online? Check out our guide on the Wix blog: What is an eCommerce Website.

Common eCommerce payment methods

We’ll start here by taking a look at common payment methods for eCommerce businesses.

Credit and debit cards

Credit and debit cards remain the most popular payment option for online purchases. When customers buy from your store, your payment processor contacts the card issuer (ex: Visa, Mastercard or American Express) for authorization. The funds are transferred to your bank account when they’ve been approved. 

Mobile payments 

Mobile payments describe any kind of payment made from a mobile device. As online shopping moves increasingly towards a mobile-first market, payments made from smartphones continue to grow in popularity. Mobile payments include payments made through digital wallets such as Apple Pay and Samsung Pay, peer-to-peer payments through apps like Zelle and Venmo, SMS payments and payments completed by credit card on a mobile browser. 

Point of sale 

Point-of-sale systems (POS) allow you to accept payments in person. Even if your business is online first, you may use a POS system if you sell services or events over the phone, at pop-up events or to charge for products that are not listed on your online catalog. Like all payment processing options there is a range in POS system costs, as well as their capacity to integrate with your business. Some point-of-sale systems, like Wix POS, can be connected to your online store so you can manage all of your sales and inventory from one, unified place. 

Alternative payment methods

Digital wallets store credit or debit card information on phones, computers and compatible devices like smartwatches. Digital wallets like PayPal, Apple Pay and Google Pay enable purchases with the press of a button and can be used for both online and offline payments. Because customers have already input their payment information, using a digital wallet offers customers a trusted, expedited purchase experience. 

Buy now pay later

Buy now, pay later (BNPL) options offer your customers the ability to split the cost of their purchase into affordable payments over time, while you get paid in full at the time of purchase. Popular BNPL solutions include Affirm, Afterpay, Sezzle and more.

Bank transfers

Bank transfers, or Automated Clearing House (ACH) payments, allow customers to transfer funds directly from their bank account to your business account using online banking services. Bank transfers are often used for B2B transactions and offer a secure and reliable way for merchants to receive payments without the need for intermediaries. 

Digital currencies 

Digital currencies, or Cryptocurrencies, can be used as an alternative payment method to traditional tender. These digital assets can be securely stored in a physical device called a hardware wallet or in a hot wallet, which is an online storage service that enables easier accessibility and trading. Platforms like BitPay facilitate the acceptance of digital currencies for your goods and services. Once you receive the digital currency, you can choose to keep it within their platform or convert its value into the currency of your choice and have it transferred to your merchant account.

The components of eCommerce payment processing

There are three essential components to eCommerce payment processing:

Payment gateways

Payment gateways are couriers that securely transfer payment information received on your eCommerce site through to your payment processor’s system. 

Payment processors 

Payment processors facilitate the authorization, processing and settlement of online payments. They work with your customer’s bank or credit card issuer to verify and authorize payments and then settle those payments into your merchant account. 

Merchant accounts

A merchant account is a business bank account in which you can accept payments electronically from your customers. 

How does eCommerce payment processing work?

01. Customer selects payment method

During the checkout process, your customer chooses their preferred payment method from the available options provided in your store.

02. Payment collection and transmission

The payment gateway securely collects your customer's payment information and sends it to the payment processor.

03. Funds verification

Your payment processor verifies that your customer has sufficient funds available to complete the purchase.

04. Issuing bank authorization

Your customer's bank receives the payment request and either approves or declines the transaction based on your customer's account status and available credit.

05. Transaction result notification

The payment processor communicates if the transaction is approved or denied to your payment gateway, which is then displayed to your customer on your business website.

06. Funds transfer

If the transaction is approved, the payment processor transfers the funds to your merchant account, completing the payment process.

Main eCommerce payment processing methods

Wix Payments 

Wix’s payment solution allows you to accept debit/credit cards, Apple Pay, Tap to Pay on Android, Google Pay and other popular payment methods from your customers. Because Wix Payments is an integrated solution, you can manage all of your payments and payment-related needs from the same dashboard as you run the rest of your online business operations. 

Pro-tip: Looking for more information on Wix Payments? Check out our complete guide on Wix payment processing.

Square

Square is a popular payment processor that broke into the market with their signature white credit card readers that can be attached to a smartphone or tablet. Square now includes a suite of tools that enable you to process both offline and online payments, sync inventory, manage payroll, track employee time and more.  Square is known for its user-friendly interface and for charging competitive per-transaction rates. 

Stripe

Stripe offers a fast, secure payment solution for online businesses that can process online, offline, one-time and recurring payments. Stripe supports many popular payment methods, including Google Pay, Apple Pay and Masterpass. Stripe’s suite of integrated products includes global payment options, financial management features and banking-as-a-service tools. Stripe’s API-based solution allows for extensive customization, but may require more technical knowledge than other payment processors during setup.  

PayPal

PayPal is one of the original players in the online payments space and continues to be a force in the eCommerce global marketplace. PayPal is both a payment processor (where customers can pay using a variety of methods stored in their digital wallet) and a personal payments platform where customers store or send money.

Amazon Pay

Amazon pay allows Amazon Prime customers to make purchases online using the payment and shipping information already stored in their Amazon account. For online merchants, Amazon Pay essentially outsources your check-out and payment processing. Amazon is a trusted global brand with an enormous customer base; offering Amazon Pay to your customers allows them to use a payment platform that they are familiar with which may smooth the path to purchase. 

Google Pay

Google Pay is a digital wallet that lets customers pay in stores with tap-to-pay function and online with pre-saved credit card, billing and shipping information. When customers select the Google Pay option, they can toggle between their saved credit cards and billing addresses. Like Amazon Pay, Google Pay is a popular choice for eCommerce payment processing that allows you as a merchant to leverage Google’s large customer base and trusted reputation.

Klarna

Klarna is a buy now, pay later (BNPL) solution that offers financing options to your customers while paying you in full at the time of purchase. Offering BNPL payment options can help incentivize purchases, especially if you sell high ticket items. Klarna stands out in the BNPL space because of its flexible payment terms, offering the ability for users to pay in equal, interest-free installments or in custom amounts within 30 days. 

Bitpay

Bitpay is a Bitcoin payment gateway that equips merchants to accept payments in Bitcoin. Bitpay accepts Bitcoin payments from users and then exchanges the value of the Bitcoin into any of the 38 currencies they support. The funds are then deposited into your merchant account.  

Tips to choose your eCommerce payment processor

Choosing the right eCommerce payment processor is important for customer satisfaction, and ultimately to the success of your business. With all the payment processing options on the market, you’ll want to spend some time researching which option suits the needs of your business. Here are some tips to help you compare options and find the best eCommerce payment processor for your online store: 

Maintain proper security measures

Computer security should be a top priority when building a website and evaluating payment processor options. In order to ensure your eCommerce site is safe to receive and transmit sensitive information, you’ll need an SSL, or secure sockets layer. Some hosting website services, such as Wix, offer built-in SSL as a part of their website infrastructure. Further, any payment processor you choose should be PCI-compliant. PCI (Payment Card Industry Data Security Standard) is a set of standards designed to assess and maintain website security measures. Both SSL and PCI compliance serve to protect both your customers and your business from payment fraud . 

Explore globally accepted payment methods

When selecting a payment processor, opt for one that supports a wide range of payment types. In addition to accepting debit and credit card payments, it's important to consider the preferred payment methods of your target audience, which can vary by country. To incentivize customers to complete their purchases, especially as you expand globally, enable popular options like Digital Wallets, Mobile Payments, ACH and more. Additionally, ensure that your chosen payment processor can calculate and apply the appropriate tariffs and sales tax based on the customer's location and applicable regulations.

Confirm payment tokenization services for recurring payments

Tokenization is a way to keep online payment info secure. When your customers make a purchase, their sensitive data gets replaced with a unique token ID, which helps protect against data theft. The same token ID can be used for recurring payments, which results in a faster checkout process for customers making repeat or recurrent purchases. Tokenization is a win-win—you can offer customers the convenience of express checkout while keeping data safer and secure. 

Look for third-party app integrations

Not all payment processors are built the same. While most payment processors accept a variety of payment methods you may want to offer additional options based on your business needs and the needs of your customers. Not offering your customers their preferred payment method has an opportunity cost of potential missed sales. This is where third-party app integrations become important. By selecting a payment processor that integrates with third-party apps, you can expand the range of payment methods you accept, providing your customers with a broader choice and a more convenient shopping experience. These integrations can also help streamline your operations by automatically syncing payment data with your other business tools, such as accounting software or inventory management systems. 

Check maintenance fees

Payment processing isn’t free. As you compare different processing options, compare their fee structures:  interchange fees, assessment costs, monthly fees and other expenses should all factor into your cost accounting. Choose a payments partner that doesn't take a large cut out of your sales and offers a pricing model that aligns with your business needs. This may involve a flat fee plus a percentage for each transaction, a flat monthly rate or pre-negotiated transaction fees through your eCommerce platform.

Ecommerce payment processing FAQ

How do I choose the right payment processor for my eCommerce business?

When choosing a payment processor for your eCommerce business, consider factors such as transaction fees, security features, ease of integration, customer support and compatibility with your eCommerce platform.

What are the typical costs associated with payment processing?

Do all businesses qualify for a merchant account for online transactions?

Which payment gateways are recommended for eCommerce websites?

How does tokenization enhance payment security in eCommerce transactions?