The term “brick and mortar” in payment processing refers to traditional physical retail businesses that have a physical presence, such as a physical store, office, or location where customers can visit to make purchases or conduct business. In contrast, online businesses or e-commerce stores that operate solely on the internet are often referred to as “virtual” or “online-only” businesses.
When it comes to payment processing, the key difference between brick-and-mortar businesses and online businesses lies in the way transactions are conducted and payments are processed:
- Payment Channels: Brick-and-mortar businesses typically accept payments in person, where customers physically visit the store and make purchases using various payment methods like cash, credit cards, or debit cards. These businesses often use point-of-sale (POS) systems or payment terminals to process transactions.
- Face-to-Face Interactions: In a brick-and-mortar setting, customers have direct face-to-face interactions with employees or sales associates who can assist with the payment process, answer questions, provide recommendations, and offer personalized service.
- Payment Security: Brick-and-mortar businesses need to ensure the security of payment transactions and customer data within their physical premises. They may need to comply with Payment Card Industry Data Security Standard (PCI DSS) requirements to protect cardholder information.
- Offline Processing: Payments made in a brick-and-mortar environment are typically processed in real-time or with a minimal delay. The payment processor or acquiring bank verifies the transaction and settles funds accordingly.
On the other hand, online businesses have different payment processing dynamics:
- E-commerce Platforms: Online businesses operate through websites or e-commerce platforms, where customers browse products, add items to their virtual shopping carts, and make payments electronically.
- Online Payment Gateways: Online businesses use online payment gateways to securely process payments. These gateways facilitate transactions by securely transmitting customer payment information to the payment processor for authorization and settlement.
- Virtual Transactions: Transactions in online businesses occur remotely, without face-to-face interactions. Customers enter their payment details manually or store them securely for future transactions.
- Online Security: Online businesses need to prioritize data security and protect customer payment information from potential cyber threats. They must comply with security standards, such as PCI DSS, and implement secure encryption and fraud prevention measures.
- Online Authorization and Settlement: Online payments may involve an authorization process similar to brick-and-mortar transactions. However, the settlement may take slightly longer due to the additional steps involved in online processing.
It’s important to note that many businesses operate in both brick-and-mortar and online environments, combining physical stores with online shopping options. These businesses need to have suitable payment processing solutions in place to cater to both channels effectively.
