How Does Online Credit Card Processing Work?
Saturday, May 30th, 2009Using credit cards as a mode of payment for online transactions is very common these days. These payments via the credit card undergo a process. This process starts with swiping a credit card in a store. Every transaction made on the card is immediately registered with the card’s provider. For declined cards, the provider alone has access for the reason behind it. There are cases where-in the merchant has not yet registered with the provider. There is a system time out. Another reason would be: if the purchase is greater than the balance of the card. Same goes with online payments, swiping is not done and manual transaction replaces the use of a card terminal.
Initially, a merchant must acquire a merchant account. This goes hand in hand with a payment gateway account. A merchant account is a type of bank account that can receive and take in payments via credit cards. A payment gateway account is utilized as the transaction handler. It is also regarded as an online and electronic credit card processor. It handles the transfer requests and verifications.
Here is the step by step procedure of how online credit card processing works.
Step 1. – CUSTOMER
The customer visits the online store. He makes a purchase by keying in his order.
Step 2. – SHOPPING CART AND WEB HOST
The shopping card utility collects the order details. This is accessed thru the web host. The order details in the shopping cart with the merchant account is forwarded to the secure server of the payment gateway.
Step 3. – PAYMENT GATEWAY
This would immediately send out the transaction details to the merchant’s actual acquiring bank. The bank is notified of all information about the transaction.
Step 4. – MERCHANT’S BANK
The acquiring bank of the merchant will send the information regarding the transaction. The information will be sent to the company handling the card.
Step 5. – CREDIT CARD COMPANY
The transaction is under verification. The card company will respond via codes if the transaction is approved or denied. The coded response will be sent to the merchant’s bank.
After the merchant’s bank receives the card transaction, it sends back the details to the processor which is the payment gateway. If the payment is approved and credited, the bank/card company will deposit the money to the account of the merchant. This is done on a specified time.
Step 6. – PAYMENT GATEWAY FORWARDS DETAILS.
Details of the transaction response will be transmitted to the online store of the merchant.
Step 7. – INFORMATION DISPAY
The response and transaction information is shown to the customer. The customer is notified if the card was charged or the attempt was denied.
Where Do I Find a Provider?
(Credit Card Processing Provider)
To have a good provider is essential for your online businesses. Looking for a reliable provider should be done carefully. You can browse thru the Internet. This will enable you to gather information about different providers. Until you find the provider that levels with you expectations. You can also visit the site http://www.merchantseek.com/index.shtml. This site will help you find a merchant provider without too much hassle. But if you already have a one, you can still opt for other credit service companies. Many card service companies have this service. Always maximize your options.
It is imperative you check the credibility of your merchant account’s bank. This will come in terms with your card processor. Established names in the card processing industries include PC Verify, Cyber cash and I Authorize. VISA, AMEX, MASTERCARD are also credit card companies which have reputable names as credit card service providers. Their names carry the reputation they have established over the years in the business.
