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

Panah C Rad asked:




Have you been a victim of online transaction fraud? If you have bought items on eBay or other 3rd party marketplaces, you have probably had an experience with a seller who has tried to take your money without delivering on her promise. If you are a victim of online fraud, you are not without hope. There are steps you can take to prevent and fight online fraud:

PayPal Protection: Most online marketplaces allow you to use PayPal as the safer method of payment. PayPal comes with numerous protection policies for sellers and buyers. Unfortunately, unethical sellers always find holes in the best protections plans. For instance, if you buy a digital product using PayPal, and you do not receive your product, there is a good chance that you won’t get your money back. But you should file your dispute with PayPal regardless and push them to move your case forward.

Credit Card fraud protection: if PayPal does not honor its buyer protection policy, you should contact your credit card issuer to ask for a charge-back. Most credit card companies will ask you for transaction details to investigate. So there is a chance that your chargeback can be rejected (especially if PayPal challenges your charge-back). It is essential for you to use a $0 fraud liability card to make sure you are protected to some level. You should also provide your credit issuer with proper documentation to help them resolve the situation in your favor. The best way to go is to save all the communications and transaction documents that you have from the seller and forward them to your issuer’s investigation team.

Internet Crime Compliant center: if your charge-back is rejected by your card issuer, you should contact the authorities about your online transaction. Internet Crime Compliant Center (IC3.gov) is one of the best places to go to file a police report against the fraudulent seller. You need to make sure you have all the documentation handy to provide the investigators with information about the seller. Please make sure to use this as the very last resort. If you file a complaint with IC3.gov, real investigators will be on your case, which means you will be held responsible for any lies. So make sure to tell the truth.

Online fraud is very common these days. While services such as PayPal make it hard for fraud artists to trick folks, fraud still happens every day. By using a safe credit card you can protect yourself against most fraud cases, but in worst case scenario you should not be shy about contacting the authorities to report any fraud cases.

Tiffany

Ernest Paul asked:


So you are a merchant with a website and you wish to process credit cards online because you are aware that credit card processing is the most convenient and most common mode of payment on the internet. Well, first of all, besides your website or online store you need to have a merchant account provider, engage the issuer of the credit cards that you plan to accept as payment, and use the payment gateway services.

Let’s see what actually happens when credit card payments are accepted online.

Now, in order to sell your goods online, you, the merchant, need to have a merchant account and a payment gateway account. When a customer visits your website and decides to buy something he will type in his particular credit card details. The billing information and order details are immediately dispatched to the payment gateway secure server by the online store administrator where they are processed and then sent to the merchant’s acquiring bank. The bank then sends the information to the bank that has issued the credit card in order to get the transaction verified.

Once the verification is made the payment will be either approved or rejected. This response is then forwarded to the merchant’s acquiring bank by the credit card issuing bank and the bank then forwards these transaction details to the payment gateway. If a payment has met with approval, the payment will be deposited into the merchant’s account. The details are then sent back to the website or online store. Then the same information is then presented to the customer, and he is informed that his credit card was charged. If a payment has not met with approval, it will be rejected or denied and the customer will be informed of this, too.

Although this sounds as if it is a lengthy process it is streamlined and takes only a few seconds to be performed.

How much a merchant account and a payment gateway costs can be different depending upon the provider. Of course, you will be expected to pay a one-time set up fee, and you may also be obliged to pay a discount rate for each payment, as well as a minimal fee for each transaction. Again, fees could also be charged on the transaction total, at various processing stages of an online payment. All this normally adds up to but two to three percent of the total charges.

Practically all experienced webmasters all over the world realize the value of online credit card processing and use it to their advantage as it helps to optimize their business. Why don’t you join them?



OLIVER