E-commerce mainly thrives because credit card processing is possible. Although the process of buying online is quite simple and quick, there is actually a lot of processing that is happening that allows the transaction to go through. Read on to learn more about the essentials of online credit card processing.
Online businesses would usually have to first get a merchant account or the services of a third party credit card processing company. Getting a merchant account would allow you as an online store owner to accept credit card and debit card payments. It would connect your bank to your store, allowing a seamless transfer of funds. Today, there are many banks which offer merchant accounts to web-based businesses. You can also check out the service and accounts offered by e-commerce merchant account providers.
You would also have to secure a payment gateway, which is the interface between the shopping cart software of your store and the merchant account. It is the one responsible for safely and securely encrypting the information of your customers and for verifying the availability of funds.
After a customer places an order online and enters his or her personal and credit card information, the transaction is sent to the payment gateway. After it is authorized, information is sent to the merchant’s processor and then to the credit card network that transmits the information to the bank that issued the credit card and to the bank of the merchant. Once the transaction is approved or declined, the results are send back to the payment gateway and the customer should see a confirmation screen which should indicate whether the payment was accepted or declined.
To prevent any incidents of fraud, merchants usually have the option to review orders and have a chance to decline or accept them prior to having the items shipped. This allows them to check if the shipping address and billing address of a certain customer match and for any other unusual or suspicious transactions.
The cost of online credit card processing varies depending on the type of account and payment gateway you are using. It is also dependent on the volume of sales or transactions that you regularly process. Usually, merchants need to pay a transaction fee for every payment that is processed as well as other fees. Make sure to check with your merchant account provider or credit card processing service provider so you would have an idea of all the costs associated with the service.