Accept Various Ecommerce Payment Processing Methods

An internet merchant account is a unique type of bank account that is established for the sole purpose of enabling your business to accept credit card payments online. Ecommerce credit card processing involves a series of complex stages , with the ultimate of these being when the net proceeds of your sale are deposited into your business’ checking account, usually within 2 to 3 business days from the date of sale.

The 5 principal parties typically involved are:

• the Credit Card Merchant (you);
• the Cardholder (your website’s customer);
• the Issuing Bank (the bank from whom the Cardholder obtained his credit card);
• the Acquiring or Merchant Bank (from whom you obtained your online merchant account);
• the Processor (the service that actually processes the online transaction).

In issuing a credit card to the Cardholder, his Issuing Bank is in effect granting him the right to borrow money up to his credit limit, so he can purchase goods or services from Credit Card Merchants (such as you, via your website).

[Note: If you have any trouble understanding any of the terms used here regarding internet merchant accounts, please refer to our Merchant Account Glossary of Processing Terms .]

Ecommerce credit card processing uses what is known as ‘real time processing’, which enables you to process your website’s orders securely through your merchant account without any manual work on your part. With real-time processing, you do not have to manually input any of your customer’s information – and his purchase is approved or declined in seconds.

The initial step in being able to accept credit card payments online is for your real time system or ‘payment gateway’ to submit an authorization transaction to your processing service, which then remits the authorization, via the network for MasterCard and Visa transactions, to your Issuing Bank. Here, the Cardholder’s credit card is validated, as is the amount of the transaction to ensure it does not exceed the Cardholder’s credit limit. In addition it checks to ensure the address for billing the customer is the same as that in its own records.

If there are enough funds available, the Issuing Bank sends an authorization approval and code to your payment processor. If there are not enough funds available on the customer’s card, or if the billing address or any other data discloses a discrepancy, it remits a message declining the transaction to your processor. The processor then sends you an authorization or a transaction declined message.

Assuming the authorization succeeds, the Processor utilizes the same network to ask the Issuing Bank to deposit your transaction proceeds (less the discount rate and other fees you agreed to when signing up for your internet merchant account) into the account you established with your Acquiring Bank.

The Acquiring Bank then transfers this net amount to your business checking account, usually within 2 or 3 days of the sale (although this may take more time depending upon the risks associated with your website’s products/services and the merchant account provider you select).

Your ecommerce credit card processing will include an online reporting system so you can view the transactions. And, each month you will receive a monthly statement from your web merchant account provider, summarizing the month’s transactions, fees, etc.

Ecommerce merchant providers will also charge a monthly gateway fee. This is generally $15 to $30, and is intended to cover the credit card internet processing service’s costs of maintaining and upgrading the gateway.

The majority of internet credit card processing services also offer you what’s known as a ‘virtual terminal’ , which permits you to use your computer to manually enter the customer’s data (e.g. if you take orders via mail or by telephone).

Note : You should ensure that the software for your website’s shopping cart is fully compatible with the payment gateway you select, so that no problems are encountered when you accept credit card payments online, or any other form of online payment methods.