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What is cloud payment processing?

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The GoCardless content team comprises a group of subject-matter experts in multiple fields from across GoCardless. The authors and reviewers work in the sales, marketing, legal, and finance departments. All have in-depth knowledge and experience in various aspects of payment scheme technology and the operating rules applicable to each. The team holds expertise in the well-established payment schemes such as UK Direct Debit, the European SEPA scheme, and the US ACH scheme, as well as in schemes operating in Scandinavia, Australia, and New Zealand. See full bio

Last editedApr 20232 min read

Automated processes, near-unlimited storage and scalable growth are just a few benefits of cloud payment processing. It offers a great way to optimize your payments strategy, but what is a cloud payment gateway and how does it work? In this guide, we’ll cover the definition and potential benefits for your business.

What is the payment cloud?

You’re probably already familiar with the “cloud,” a cluster of global servers hosting data remotely. This frees businesses and banks from the responsibility of onsite hosting, with all the security implications that entails. When it comes to the payment cloud, this means that businesses can collect payment from customers based around the world. Consumers can pay on any digitally connected device rather than being tied to a POS system. Examples of cloud-based payments include online ecommerce orders, contactless card payments, and in-app purchases.

How does cloud-based payment processing work?

There are numerous cloud payment processors. Some focus on processing card payments, while others work with open banking infrastructure. For the purposes of ecommerce, merchants use cloud-based payment solutions to take payment details remotely. When customers enter their payment details on a checkout page, the encrypted details are sent through third-party payment gateways for processing.

A cloud-based credit card processing terminal links the cardholder to the card network for transaction approval. It also securely stores credit card details, which means the merchant doesn’t need to worry about PCI compliance and security breaches. The best cloud-based payment systems integrate with your existing software, processing transactions in bulk batches for greater efficiency.

What are the benefits of cloud-based payment systems?

One of the primary benefits of cloud-based payment systems is their flexibility. They provide a seamless customer-facing portal with full integration. A good system offers businesses 24/7 access to sales reports and transaction data. You should be able to track payments in real-time. Look for systems that integrate with your existing billing and accounting software to make the most of these features.

Additional benefits include:

Scalability: It’s easy to get started with a dedicated payment gateway and scale up as your business grows. With payment transactions housed remotely, you don’t need to worry about investing in physical IT infrastructure or capacity.
Improved security: Cloud-based payments are more secure than physical systems with data encrypted and backed up remotely. They’re also PCI DSS compliant.
Efficiency: Businesses can manage multiple systems from a single system, linking cloud payment systems with inventory and customer management solutions.
Reduced cost: Through the combination of flexibility and offsite data hosting, businesses can spend less on a cloud-based payment service when compared to investing in hardware. Upfront costs are lower, ideal for startups and small businesses.

Is cloud-based credit card processing right for my business?

Cloud-based card processing is useful if it caters to your customer preferences. According to a J.P. Morgan report, cards account for 47% of all ecommerce transactions. This still makes them the most popular online payment method. If your business runs a high volume of card transactions, it probably makes sense to consider a payment gateway. You’ll be able to integrate the gateway with your cloud-based billing systems and other ecommerce tools, creating a more efficient workflow. Cloud payments have transformed many U.S. businesses already by automating collection processes.

Of course, you can choose alternative payment methods to complement your cloud-based credit card processing system. GoCardless works side by side with major payment gateways using bank-to-bank payment methods like open banking and direct debit. Rather than paying costly card processing fees or chasing up on late invoices, you can collect payments directly from your client’s bank account. We also offer anti-fraud intelligence features to keep customer financial details safe – in and out of the cloud.

We can help

GoCardless is a global payments solution that helps you automate payment collection, cutting down on the amount of financial admin your team needs to deal with. Find out how GoCardless can help you with one-off or recurring payments.