Archive for October, 2007

How Websites Process Credit Cards

Tuesday, October 9th, 2007

The process of making a sale through your website and its internet merchant account is a lot more complicated than it looks on the surface. Many steps are required:

The first step occurs when the customer enters your online store and begins making a purchase, by adding items to the shopping cart.

During the next step, the information required to process the order is gathered from your customer via an online form. This includes credit card information, shipping data and product information.

The payment gateway now sends that order to the processing company. That company will double check the information you’ve sent, see which company the customer’s card is with, and then send a request for money.

This request is transmitted to the customer’s credit card company (issuer). Once they’ve validated the card and account, they’ll verify that the funds for the request are present. As long as everything is in order, this company sends information back to the processing company and lets them know that the funds are there to be transferred. If a problem occurs, then the card-owning company also lets your processing company know what it was.

In step five, the credit card processing company relays information back to your shopping cart via the payment gateway to let it know whether or not the order can be completed. It also notifies the customer whether or not the order has gone through, and lets you know if you can ship your goods.

Despite the complexity of the process, all of the above takes place within a matter of seconds. Shortly afterward, the processing company starts a process called the “funds capture”, by which the money will be sent from the customer’s credit card account to your checking account (the one associated with your internet merchant account). When your bank account receives the funds, a settlement occurs. At this point, the transaction has finally been completed.

If you are interested in learning more about the process, I invite you to visit the AuthorizeNet page on our site.

Michael Rupkalvis
The Transaction Group