Credit Card Processing

Making purchases over the Internet involves five parties: the customer, the customer's credit card issuer (Issuing Bank), the merchant, the merchant's bank, and Credit Card Processing Company over the Internet. A merchant account, which is given by an "Acquiring Bank" or "ISO" (Independent Sales Organization), is needed in order to accept credit cards. When a merchant processes a credit card order, the transaction isn't actually going to the merchant's bank. Instead, the transaction is submitted to a "Credit Card Processing network". The company that runs the network (many such Credit Card Processing networks exist) actually processes the transaction so that funds are moved from the customer's credit card account into the merchant's bank account. 

A customer enters your website and decides to place an order on a product/service. The customer selects the product/service via your shopping cart or catalogue. The order is totaled, and a request is made to purchase. The customer now takes his credit card, which he gets from an "Issuing Bank," and enters the sensitive data (credit card number, shipping address, etc.) onto the given form. In Credit Card Processing the sensitive data is then submitted, collected and passed securely through our server. This data collection is done in real time by their system via the Web, or can be collected by mail or telephone and then entered through our virtual terminal.

Now with all the needed information, their system securely contacts the processor associated with the merchant¹s Merchant Account, and verifies that the credit card number is valid, not stolen, etc., as well as comparing the card number to our anti-fraud database. If all passes correct, the purchase price will be reserved from the "Issuing Bank" of the consumer’s credit card, and allocated to the merchant¹s Merchant Account. This transaction is then added to a growing "batch" that is associated to the Merchant Account.

Early each morning, the processor will settle the Master Batch; it is at this time that all monies move. Funds reserved will be transmitted from the Issuing Bank of the cardholder¹s credit card to the merchant¹s Merchant Account. Discount fees associated with the Merchant Account will automatically be paid out of these funds as they are moving. 

An online shopping cart system with Credit Card Processing is essential to the success of a commercial website. With online Credit Card Processing, transactions can occur 24 hours a day at the convenience of the customer. To accept credit card payments automatically from your web site, a merchant account and payment gateway or similar Credit Card Processing service is required.

Real Time Credit Card Processing: There are numerous online payment processing services available. Some are more costly than others. Typically the cost is relative to the risk. If you have decent credit and have access to discounted merchant services through Costco/Nova or a U.S. bank merchant account, you can couple it with Authorize.Net payment gateway service at about half the cost of the quick qualify all-in-one services. 

There are essentially two types of Credit Card Processing systems. The oldest and least expensive method is where the merchant bank is a separate business entity from the payment gateway service. However, in recent years, numerous Credit Card Processing companies have emerged that offer all-in-one solutions. The most cost effective Credit Card Processing solutions are usually the older, more established systems where the merchant bank or financial institution is separate from the payment gateway service. The all-in-one payment processors are quick and easy, but the transaction fees may be double or triple the combined cost of a conventional merchant account and payment gateway.

PayPal is an all-in-one type of payment Credit Card Processing service. It is a quick inexpensive way to begin accepting payments online. There are no credit rating requirements and there are no minimum monthly expenses. In order to make a payment through PayPal, your customers must first sign-up for an account, which takes time and may be confusing for some people. Then, they have to deposit money into their PayPal account. This can be done by credit card, but many credit card companies charge the customer a cash advance fee.