Online Payment Processing: A Guide
Credit cards are being used for online business transactions in today’s marketplace. Most of the developed and developing countries around the world use credit card as a form of payment. It is an easy way to make payments and it also has many benefits for businesses 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. The hindrance for a new business to start accepting credit card payments is the time it takes to learn how to do it and the words or language associated with credit card processing. The merchant account, the payment gateway, and the payment processor are the three main facets of credit card processing.
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. WE can think of a merchant account as a virtual bank account because it receives electronic money. It is through an agreement with a merchant services company that a business can obtain a merchant account. These merchant services company not only provides the merchant account from a larger bank they also provide other services like setting up contracts with payment processors, offer payment gateway services, and equipment.
What takes the place of a traditional card swipe terminal is an online program called the payment gateway. In a standard payment gateway the business can log in securely to their online terminal, fill out a virtual terminal form with a customer’s payment information, and charge credit cards online. 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. The way the payment gateway works is tat when the business charges a credit card for payment and the payment processor verifies the information, the merchant account is credited the payment amount which is debited from the customer’s credit card. It takes around twenty four hours for the funds to actually be deposited into the merchant account.
The payment processor is perhaps the most important part of credit card processing. This payment processor is a financial institution which is not the same as the merchant bank that verifies transaction information and processes it. They are the ones responsible to transfer funds between consumers and businesses. The merchant bank receives the money from the payment processor and deposits it in the merchant account. A payment processor will ensure that credit card payment made by customer reach the final recipient of the payment, which is the business owner.
Source: https://investor-square.com/investment-news/newswire/business-solid-investment/