Anyone selling products or services online will need to accept credit card payments if they want to establish a credible business, thus they will need to be familiar with credit card processing.
Distance selling can also involve such payment methods as PayPal, cheques in the post, or money transfers, but the most preferred option for most buyers is credit cards. Purchases made with a credit card are simple and fast, and they are protected to a certain extent by the card provider.
How does credit card processing work?
Credit card processing for merchants is done via a Merchant Bank Account.
What is a Merchant Bank Account?
A Merchant Bank Account is a special bank account that allows a business to accept payments by credit card. This can be done either manually or in real time.
What is a manual credit card payment?
Credit card processing done via the manual option is suitable for those merchants who are only making low-volume sales. This involves the customer sending their order and credit card details to the merchant’s website, but the credit card details are stored securely on the hosting server. The merchant begins the credit card processing by logging in securely to the server to retrieve the card details, and then contacting their bank to instigate the card payment.
What is a real-time card payment?
This is credit card processing which is suitable for high-volume sales. This means that the customer makes their order on the merchant’s website and also inputs their card details so the payment can be made in real-time as the order is being put through. The payment order is sent automatically via a Payment Gateway which routes it to the appropriate processor, then submits it to what is known as the credit card interchange.
From here, the payment request then goes to the credit card issuer to confirm that there are sufficient funds in the card account to complete the transaction. If approved, the payment is routed to the Merchant Bank Account and the merchant will know straight away that the payment is good and that the goods or services can be dispatched.
What is a Payment Gateway?
A Payment Gateway is a piece of software programming that is integrated with the merchant’s website allowing for real-time credit card processing. This means that the credit card payment can be carried out and authorised securely on the Internet, and instant payment made to the merchant’s bank account.