The 10 Most Unanswered Questions about Payments

How Can Payments Be Processed in Online Transactions?

Payments through credit card is today’s most accepted way of making payments for online business transactions. The method of payment via credit card is already being used not only by developed countries but by developing countries as well. Paying by credit card is the easiest payment method and is also beneficial for those who accept them. Prevention and detection of fraud, elimination of bouncing checks, quick money deposit in business bank account, high security in paper currency, and ease in accounting. It can be a daunting task to obtain credit card processing for your business not only because of the learning curve but also because of the jargon associated with credit card processing. If you want to learn credit card processing, you need to learn about merchant accounts, the payment gateway, and the payment processor.

A merchant account is a special type of bank account given to businesses so that they can accept credit card, debit card, and electronic check payments. This account accepts electronic money and can be regarded as a virtual bank account. Obtaining a merchant account for business is typically done by having an agreement with a merchant services company. Merchant services companies resell merchant account from larger banks, sets up contracts with payment processors, resells or offers payment gateway services, equipment and can be a one-stop-shop for credit card processing.

Payment gateway is an online program that can be compared to a traditional card swipe terminal. A gateway payment will allow a business to charge credit cards online after the business logs in to their online terminal and fill out a virtual terminal form with a customer’s payment information. A payment gateway supplies an application program interface that helps online businesses to integrate credit card processing with their online order forms and shopping carts. When a card is charged for payment using a payment gateway, the information is forwarded to the payment processor and then the credit card is debited and the business merchant account is credited for the amount paid. Within twenty four hours, the money is actually deposited in the merchant account.

Perhaps the most important part in credit card processing is the payment processor. The transaction information is verified and processed by the payment processor which is a financial institution different from the merchant bank. Money is distributed from the consumer to the businesses through them. Merchant banks simply act as the recipient of the money from the payment processor. A payment processor will ensure that credit card payment made by customer reach the final recipient of the payment, which is the business owner.