Sean P Jones asked:




Credit card payment is the most common way of online transaction, yet when it comes to understanding how credit card processing works most of us are quite confused.

When a retail store cashier swipes your credit card through credit card terminal, the following process takes place: credit card and payment details are sent electronically to merchant’s acquiring bank, which contacts credit card issuing bank; in case transaction is approved, funds are deposited on the merchants account.

Online credit card processing in ecommerce adheres to the same processing steps, except the physical credit card terminal that swipes your card in a retail store is substituted by payment gateway (Authorize.Net, 2checkout, CHASE Paymentech, etc.) – a service that processes online payments in a secure way.
The overall credit card processing scheme in an online store usually looks like the following:

A merchant needs to have a merchant account and a payment gateway account in order to set up credit cad processing in his store.

Let’s follow the steps from the time a customer types his credit card number in an online store to pay for his order till he receives a response whether the payment went through:

1. A customer places an order and types his credit card number on a secure site of an online store. Store administrator sees the shopping cart details, which include order and billing information.

2. Shopping cart details along with merchant account are sent to payment gateway secure server for processing.

3. Payment gateway forwards transaction information to merchant’s acquiring bank.

4. Merchant’s acquiring bank forwards transaction information to the credit card issuing bank for transaction verification.

5. Credit card issuing bank verifies transaction and sends response code (Approve, Deny, and reason for denial if applicable) back to merchant’s acquiring bank.

6. Merchant’s bank sends credit card transaction details and response back to payment gateway. If payment is approved, the bank will deposit funds on a merchant’s account at the scheduled time.

7. Payment gateway sends transaction details and response back to merchant’s online store.

8. Payment information is displayed to the customer; i.e. “credit card was charged”, “credit card was denied”, etc.

At certain processing stages fees will be charged from the transaction total. The amount of fees depends on a payment gateway used, merchant account, credit card type, and other factors; it usually adds up to be two to three percent of total charges.

Chester

Arvind R asked:


PayPal has a Standard merchant account where it hosts the cashier page and allows merchants to accept credit cards from customers without requiring them to open internet merchant account? How can they do it?

GARLAND

Kristy1 asked:


There is a one common way to do online transaction that is credit card payment, still one thing comes to understand that how credit card processing works most of us are quite mystified.

Whenever a trade store cashier swipe your credit card throughout credit card fatal, the subsequent procedure takes place: credit card and payment details are sent by electronic means to merchant’s acquiring bank, which contacts credit card issuing bank; in case transaction is accepted, money are deposited on the merchants account. A merchant require having a merchant account and a compensation gateway account in order to set up credit cad handing out in his store.

When you do an online credit card transaction there are lots of things that you perform. The virtual store that you would like to buy from will inquire for your name and credit card number. The online credit card transaction arrangement will confirm whether or not the credit card is owned by the name specific. This step is in fact not obligatory since not everyone uses their own credit card, and the name is most of the times written on the credit card well.

Individual sort of business I have individually set up with QSR is a drive- from side to side ice cream store.  My mercantile client treasured the enlarged speed of the transactions.  He did not require bending out of the serve window and handing the customer a receipt and pen to sign.  He simply handed a receipt to the customer all along through their buy, that customer then throng away and my merchant client was on to handling his subsequently customer!

The customer does still obtain a receipt. The credit card company do motionless need that every consumer using their credit card does collect a receiving for their credit card transaction.



JORGE