In order to accept credit cards you need a shopping cart like CartGenie, an Internet Merchant Account, and a payment gateway. A payment gateway is a system that validates a credit card during a transaction and transfers funds to your Internet Merchant Account. An Internet Merchant Account is a bank account specifically designed for e-commerce transactions. During an online transaction the shopping cart software (i.e. CartGenie) sends a request to the payment gateway provider asking it to verify that the credit card being used has sufficient funds to pay for the purchase. If it does, the gateway handles the transaction details and transfers the funds into the merchant account.
How does credit card processing work? Understanding the backend mechanics of how a shopping cart, payment gateway, and an Internet Merchant Account work together can be a bit confusing. Below you’ll find a detailed explanation of how the cart, gateway, and merchant account all work together and why you need all three. Steps 1 – 6 happen in a matter of seconds while steps 7 and 8 occur daily.
1. Your customer enters their credit card details and clicks submit. The Online Store (i.e. CartGenie) sends the encrypted credit card information to the Payment Gateway (i.e. iTransact).
2. The Payment Gateway submits the transaction to the Credit Card Interchange. All parties involved in the credit card transaction (i.e. 2. processors, acquirers, issuers and so on) manage the processing, clearing, and settlement of the credit card transaction. This is also known as Interchange.
3. The Credit Card Interchange sends the transaction to the customer’s credit card issuing bank to see if the customer has enough funds available on the card.
4. The Issuing Bank approves or declines the transaction and sends the transaction response back to the Credit Card Interchange.
5. The Credit Card Interchange sends the approve/decline response back to the Payment Gateway.
6. The Payment Gateway sends the approve/decline response back to the Online Store. If approved the order is accepted by the Online Store. If declined the Online Store displays the reason for the decline.
7. If the transaction was approved Settlement occurs. Settlement is the process in which funds are transferred (after fulfillment) from the customer’s Card Issuing Bank to the merchants Internet Merchant Account (i.e. Payment Alliance). This process happens daily.
8. Your Internet Merchant Account transfers the payment to your normal Merchant Bank Account and you now have the funds. This process happens daily.
Check out our partner, iTransact, a leading payment gateway provider: http://www.cartgenie.com/pg_payment-gateway.asp
Check out our partner, Payment Alliance, a leading online merchant account provider: http://www.cartgenie.com/pg_merchant-account.asp