What types of online payment platforms exist?

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When setting up an online business, it is very important to think about several aspects that guarantee that everything runs smoothly. One of the most important aspects in these uncertain times is an online payment platform.

The Virtual POS Terminal is a merchant number issued by an acquiring bank that enables the business to charge credit or debit cards of the most important brands in the world. This process becomes possible thanks to a payment gateway, which is the software, and that allows a certain online store to accept Visa, Mastercard, Amex, Maestro and Diners Club cards, among others.

The virtual POS terminal is decisive, since if the merchant number is not activated, it becomes impossible to charge the card and, as a result, the transaction will not take place. The main function of it is to collect all the payments on the bank account of a certain client. For this reason, all online commerce must be connected to a virtual POS payment platform, in order to be able to collect all the money generated by selling their products or services through credit or debit cards, the most widely used payment method today.

Now, especially if you are a beginner, you should get familiar with several aspects that are involved in the use of this system. For example, what charges does it allow? What are the advantages of installing it in my store? What does a high-risk payment platform mean? What is the difference with a low-risk one? Is it legal to use payment platform? These are some of the questions that we will try to answer in this article.

What is the function of a payment platform?

To get a better understanding of the relevance of virtual POS terminals, it is enough to take a look at the large number of charges they allow to transfer.

Among its main transactions are non-contact telephone charges, recurring payments or subscriptions, e-mail payments, payment of hourly bills or reservations for high-risk businesses.

Nevertheless, its main feature, for which every e-commerce must install an online POS payment platform, is a possibility it gives to charge debit and credit cards on the webs that use payment plugins. The most known and commonly used e-commerce plugins are: WooCommerce (WordPress), PrestaShop, VirtueMart, Shopify, ZenCart and Magento, among others. Their most important feature is the easiness of implementation in practically any online store. WordPress, for example, is the most used CMS in the creation of any web page where all these e-commerce plugins are compatible.

What are the advantages of the payment platform?

If you run an e-commerce business, you have to take into account the large number of benefits that an online virtual POS payment platform can offer you.

First of all, it is the payment system that takes the least time to charge the client and transfer the money to your bank account once the sale has been made. The accreditation time can take from 3 to 4 days, depending on whether the payment terminal is considered high or low risk (we will delve into these issues below).

On the other hand, virtual POS terminals are perfect when it comes to compulsory purchases. Accepting debit or credit cards, the payment can be made within seconds, unlike wire and Western Union transfers that take longer and where the client has time to think if he really needs this goods or services. This is a key point when the client makes an immediate decision to purchase.

Also, one of the most important aspects, both for the online store owner and for his clients, is that POS terminal is a very safe payment method due to being protected by SSL protocol. This protocol prevents, for example, that a hacker can get an access to the sensitive information that is transmitted from one payment point to another, and that can include both personal data and financial information of the client.

In addition, the commissions that e-commerce businesses have to pay for using POS terminal are very cheap, comparing to other payment methods.

Finally, another advantage of this platform is that it can be used anywhere in the world, allowing to accept online payments from anyone who has a credit card and Internet connection.

What does the concept "high risk payment platform" mean?

Basically, a high-risk online payment platform is the one that carries out the transactions related to any activity considered high risk or dangerous by financial entities. This does not mean that it is illegal to develop this commercial activity, but it may involve high number of chargebacks or refunds. In this case, the bank officers of the payment processing systems carefully analyze each transaction made by the merchant and if they detect the slightest risk of money laundering, they include this business to a list of "high risk". This is very common among businesses such as Forex, Tarot, sports betting, sex shops or cryptocurrencies.

Another reason why a financial institution or payment processing provider can consider an activity as of high risk is when it is legal to sell a certain product in some countries but not in others, such as tobacco.

To make the difference more clear, illegal businesses are those that form part of money laundering practices and use funds generated by criminal activities. In this case no financial institution or acquiring banks in the world will accept such a client nor will process his payments, fearing the cancelation of its financial license and the closure of the company. However, if you have all the documents in order, your business will run smoothly.

To sum up, high-risk online payment platforms process transactions carried out by businesses that develop legal activities but are considered as "high-risk" due to other factors.

High-risk online payment platform

Low-risk payment platform

The differences between a low-risk and high-risk online payment platforms lie in the level of security and type of sales authorized by the terminal. As its name implies, a low-risk virtual POS is a system that is less likely to be violated by external agents due to its risk level.

When working with high-risk POS terminals, the possibility of chargeback frauds is higher, although it almost always depends on the commercial activity of a website. If you use an online payment platform that counts with a high-quality payment gateway, processing transactions runs more smoothly and the percentage of cancelled or suspicious transactions is much lower. It is essential that the chosen platform is secure and guarantees the protection of commercial data and of its respective clients.

In terms of the types of purchases and services, those businesses that use high-risk virtual POS terminals are usually large stores, sports betting websites, multi-level marketing, software sales and travel agencies, businesses that generate and process large amounts of money and therefore suppose a higher level of risk.

What types of payment platforms exist?

High-risk POS Terminals are ususally requested for tangible products and intangible services.

We speak of intangible services, when we refer to the following businesses:

  • Tarot.
  • Request and cancellation of credits.
  • Dating websites and erotic content.
  • Software sales.
  • Financial services.
  • Forex currency exchanges.
  • Sports bets and bingos.

These are just some cases, since we could also include, for example, purchase and sale of virtual currencies or the purchase and sale of shares.

On the other hand, tangible services are those such as:

  • Flight contracting and travel agencies.
  • Sale of top brand clothing.
  • Electronic stores.
  • Growshops.
  • Tobacco.
  • Sex-shops.

Regardless of whether the business is high risk or low, for an e-commerce to have a virtual POS terminal and an opportunity to accept online payments, it is essential to request a payment gateway, the service that authorizes payments to online businesses.

Apply for a high-risk payment gateway

There is no doubt that it is much more complicated to apply and manage a high-risk payment gateway than a low-risk one. This can be explained by the fact that, at present, financial and payment institutions are the only ones that facilitate access to virtual terminals, with the corresponding supervision of the most important card brands. When a bank grants a payment gateway to a certain client, it is because it has gone through all the money laundering filters and possible risks of a transaction non-payment are eliminated. That is why, if a client's account is recently opened and he doesn’t have any financial history with the entity, it is most likely that the request for a high-risk virtual POS terminal will be denied. In addition, in the process of granting the payment gateway, banks place great emphasis on credit lines provided by card brands, based on some characteristics of the business. These characteristics usually are:

  • A nature of the business.
  • Average ticket of the operation.
  • Level of client´s solvency.
  • Years of the experience that the company has operating on the market.
  • Average monthly and annual billing.

If any of these points does not meet the criteria, the most common is that the bank does not grant the payment gateway to a certain e-commerce.

If this happens, it is very likely that the entire procedure of operating as an e-commerce will be postponed, since your company will not be able to accept credit card payments until you obtain this very important service.

To avoid this type of situation, offshore payment gateway can become a perfect solution, especially for small businesses. Of course, only in case you carry out a legal commercial activity.

Offshore payment processors leave aside risks related to the solvency of the business owner or average ticket values. As a result, the business can begin with its activity safely and quickly.

What are the advantages of offshore payment gateways?

Offshore payment gateways are very easy to obtain, provided that the business´ activity is legal and does not represent an excessive risk to the entity. The collaboration and the veracity of the data that the owner provides are the key factors to grant him the service of this type. If the applicant can demonstrate that the provided information is correct and that the company holds all the necessary resources, then it will be able to obtain an offshore payment gateway within 3-4 days. Otherwise, if the legality of the products and services offered to the clients raises the doubts, the application will be rejected automatically.

Among the main advantages of these payment platforms, we would like to point out that commissions are charged in accordance with the risks that a particular business represents for a financial entity. In turn, the support it provides is specialized and adapted to high tech payment gateways and e-commerce. This aspect is essential to make the purchase process much easier for the final consumer.

This type of offshore service offers the possibility of generating powerful and highly developed anti-fraud protocols, so that the user navigates and makes the transaction in a safe electronic environment.

Also, a very important quality of high-risk offshore gateways is that they accept all major card brands.

Another key feature of this service is the possibility of carrying out unlimited number of transactions, so the volume of sales of your e-commerce can be very large.

Therefore, speaking in general, it is impossible to think of an e-commerce without connecting it to a virtual POS terminal and the payment gateway that allows to accept card transactions. 

If your online commercial activity is considered "high risk", then you will have to resort to a different platform, with a special payment gateway.