What’s eCommerce and How Does it Work?

If you’ve Googled “eCommerce,” you’ve probably found hundreds of results that give you a basic definition of the term. That may work as an introduction to the concept, but if you want to apply it practically, you need a more specific definition. So what’s eCommerce as it applies to your business?

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Essentially, eCommerce is the process by which people sell goods and services over an electronic network. Today, this usually involves purchases made through online merchants. Customers visit a site, find the product they’re looking for, add it to a virtual shopping cart and then go through a checkout process where they enter payment details. A vast majority of the population shops online, so businesses need to have an eCommerce plan set up to tap into this market. This article will outline the ways in which these solutions works, helping you understand the process so you can participate in it more effectively.

The Basic Procedure                  

If you’ve ever shopped online, you may think that the eCommerce experience ends when your checkout is finished. But really, it’s only just begun. When the customer adds an item to their cart, the order goes to a manager who searches the company’s database for the requested product. If it’s found, details such as a delivery date and price are calculated based on the customer’s details. Then, the order goes before a credit card processor, which will lead to the transaction getting approved or denied. We’ll detail this process in the next section.

If the transaction is successful, the shopper will receive their order confirmation and the manager will notify warehouse staff that an order has been placed. The warehouse staff will then ensure that the product is delivered on time. Through this process, your company can send goods to a broader audience, increasing your business. However, to take advantage of this selling method, you need to work with a payment processor.

Where Credit Card Processors Fit In

Payment processors deal with the electronic transfer of funds from a customer’s issuing bank to the online merchant’s account. This is essential to the transaction process, and many businesses cannot complete online sales without these services.

When a customer enters their credit or debit card information to pay for their order, the merchant’s web platform sends that transaction data through a secure gateway before it reaches a payment processor. The processor handles the details of the transaction and sends them to the customer’s bank, which reviews the order. If the consumer lacks the funds necessary to complete the order or if their security has been compromised in any way, the bank will decline the sale. Otherwise, it will approve the order and pass this confirmation back through the chain to the merchant, who notifies the customer. Later, the customer’s bank will send the money to the processor, who will pass it on to the merchant’s account.

It Helps Expose Your Company to Worldwide Business

To participate in this thrilling new marketplace, you’ll need a payment processor to handle transactions between you and your customers. Unfortunately, it’s not so easy to get approved for these services. If your company lacks financial information or has poor credit and/or a history of chargebacks, they may constitute a high-risk company. As a result, many organizations will refuse to accept their business. In other cases, processors may reject a company because they have a history of criminal behavior, or because their industry is simply considered to lack respectability.

But there’s still hope. Many processors still cater to high-risk merchants, allowing them to tap into eCommerce sales. Furthermore, high-risk accounts allow businesses to sell at a higher rate and accept foreign currencies, so merchants stand to benefit from these arrangements.


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Emily Moore

With seven years of experience in the industry, Emily is the Merchant Boarding and Underwriting Specialist for BNA Smart Payment Systems. She also has experience in credit risk management, fraud and chargeback analysis, and in-depth knowledge of chargeback mitigation. At BNA, she is responsible for reviewing, investigating, and resolving irregular transactions; identifying and analyzing trends; exchanging knowledge of trends with peers and supervisors; and keeping records of past fraudulent activities. With a solid understanding of current fraud trends and software applications, Emily has a methodical approach to problem solving, great attention to detail, and the ability to recognize patterns. As a fitness enthusiast, Emily enjoys CrossFit and playing sports to keep active. She also loves the outdoors and spending time up north.

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