Payment methods (Processing Online)

The goal of an e-commerce site should be to use software that processes all orders independently. To do this, you will need an automated method that processes the payments with a minimum of human intervention. Below are the terms you will use as you create an online transaction solution.
ecommerce Transaction Terminology

• All e-commerce transaction models, from standard online transaction software to SSL, assume knowledge of the following terms:
  
• SET protocol:
  The Secure Electronic Transaction (SET) protocol, developed in the 1990s by Visa and Mastercard to secure credit card transactions over the internet, is no longer widely used in modern e-commerce. Although SET was designed to provide high security for online transactions, its complexity and the need for special software for both merchants and consumers led to limited adoption. Most current e-commerce platforms have moved towards simpler and more universally compatible protocols like SSL (Secure Sockets Layer) and its successor, TLS (Transport Layer Security). These protocols provide a more straightforward approach to securing transactions over the internet. However, while SET isn't commonly implemented in current e-commerce systems, its principles and concepts have influenced modern security protocols and practices. For instance, the use of digital certificates and encryption techniques pioneered by SET are still relevant in ensuring secure transactions today, albeit in different forms or through different protocols. For a detailed understanding of why SET is no longer prevalent and what has replaced it, you can refer to various sources discussing e-commerce security protocols: The history and eventual decline of SET in favor of SSL/TLS are discussed in contexts explaining early e-commerce security measures.

The payment gateway is the interface between the e-commerce site and the bank. Your payment gateway will take some time and expertise to configure. Once it is configured, however, it should be secure and should cut down on manual work. It should:

1. Receive and process information from Web forms directly to you
2. Provide online validation of credit cards
3. Ensure secure communication between you (the merchant) and the merchant bank
4. Provide easy-to-read billing statements
5. Automatically deposit funds into your bank account
6. Allow several different options, including the use of CyberCash, digital wallets, SSL, or newer methods
7. Allow users to conduct transactions without having to modify their normal browsing habits radically or know about the complexities going on behind the scenes

• Dedicated Payment Gateways
  You have already learned that many products contain their own payment gateways. However, several different third-party companies now offer online dedicated payment gateway services. Rather than installing payment gateway software on your own system, you can access theirs on the Web. Online payment gateway vendors include CardSecure.com and Cybermerchant. You do not have to install complex software with these options, because these companies focus only on providing a payment gateway. Using a Web browser, you can supply vendors with your merchant account information, as well as the payment options you desire. Advantages to this approach include:
  1. Easier setup
  2. Extensive user tracking
  3. Customer support
  4. Seamless integration between your site and the Internet service provider (ISP)
  Additionally, these vendors configure the payment gateway. The chief concerns about this option include all the issues that arise whenever you relinquish full control of your site to another provider. Such concerns include the vendor's ability to provide reliable service, security, and the fact that your provider may not be able to grow with your business.

To implement online transactions you must:

1. Configure modern e-commerce site software
2. Establish an online merchant account
3. Configure a payment gateway

Prepare your Web server for automatic payments by configuring your Web pages to work with all site components. For example, your Web pages must be capable of handling requests and integrating with the payment gateway for each transaction. Databases will need to be set up for real-time inventory tracking. You will need an online merchant account to process the payment transaction online. Online merchant accounts typically include both a merchant ID (MID) and a terminal ID (TID).
Configure Payment Gateway
Most site development software includes a payment gateway. For a partial list of payment gateway software vendors:

1. Paypal
2. Apple Pay
3. Google Play

The next lesson discusses payment methods and credit card processing issues.

Payment Methods - Quiz