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What Are E-Commerce Payment Systems?

What Are E-Commerce Payment Systems?
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E-commerce payment systems are softwares that facilitate the authorization of online payments. These systems are typically comprised of a shopping cart provider, a Payment Gateway and a Merchant Service Provider that work together to provide a fully functioning e-commerce platform.

E-Commerce Payment Systems Defined

Shopping Cart

Shopping cart software is as its name suggests, a place for customers to add items to purchase, but it’s also so much more as an e-commerce payment system. Your shopping cart software will display your products and make it easy and intuitive to make an online purchase. Think of it as a virtual cart that your customer pushes around, the aisle that houses your products and the register for checkout, all in one.

Payment Gateway

A Payment Gateway is the technical glue that connects your e-commerce shopping cart to the payment processing network. A gateway may work directly with businesses or through another payment processing middleman. This software runs in the background, processing transactions and providing responses via the shopping cart.

Merchant Service Provider

A Merchant Service Provider equips businesses with merchant accounts to accept online payments. Without a merchant account, your business has no means of processing electronic payments. This is because they have direct agreements with member banks, which are vital for transferring funds via the payment network. These providers offer specific products and services to both retail and e-commerce businesses.

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How E-Commerce Payment Systems Work Together

When customers visit your online store, they browse products hosted by your shopping cart software and add desired products to their carts. Once ready to purchase, they’re prompted to enter their payment information.

In most cases, the webpage for payment information doesn’t look much different from the rest of the website. This is because the Payment Gateway is working in the background to verify the information entered and authorize the payment.

The gateway communicates the payment to the Merchant Service Provider, which initiates the transfer of funds through the payment network. The network ensures that money is moved to your bank account in exchange for the goods purchased. While this happens in a matter of seconds, this process includes an intricate web of middlemen that work with the e-commerce payment systems in the background.

You may have the opportunity to deal with fewer e-commerce payment systems, depending on which you choose to work with. By utilizing software that combines some of these services, you have the opportunity to save money, streamline support and consolidate monthly bills.

Learn how to streamline your e-commerce payment systems.


Are you looking to get more out of your e-commerce payment systems? Tell us about the changes you’d like to see below; we have great industry expertise we’d love to share with you!

About Author
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Ursula Librizzi

Ursula is the sales and marketing operations manager for PayJunction. She oversees daily marketing tasks and liaises between the sales and marketing departments.

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