Basics of Online Payments

Offshore credit card processing

Basics of Online Payments

You need to connect with credit card processors and network of both issuing and acquiring banks in order to complete an online transaction. To accomplish this task, a payment gateway can help you a lot as it connects your online business to credit card processors and banks.

To accept payments online, you need to take the services of acquiring bank. It is the job of the acquiring bank to provide you with an internet merchant account. Credit card authorization is also quite important when you want to accept online payments. Credit card authorization verifies the billing details.

Credit Card Association

Credit card association plays a prominent part in the whole process of online payments. Credit card association offers credit card services that are recognized by customer issuing banks. Examples in this regard are American Express and Discover. The main function of customer issuing bank is to provide their customer with a credit or debit card. Citibank is the common example of customer issuing bank.

When customer is doing an online transaction, customer issuing bank makes sure that the payment information entered by the customer is correct. Customer issuing bank also ensure that customer has the necessary credit to cover the cost of product that he is interested in buying.

Merchant Account

Internet merchant account is basically a contract between merchant and an acquiring bank, which gives merchant an option to accept credit cards online. Merchant need to pay a processing fee for each transaction that is being processed by him. This processing fee varies from merchant account provider to merchant account provider, therefore merchant need to be quite selective when opening Internet merchant account.

Gateway

Payment gateway has quite a crucial role to play in online payments. Payment gateway is a service that offers a network among customers and merchants in order to process payments and authorizations. A third-party supplier such as GeoTrust normally implements payment gateway. Processor in online payments is a big data center whose main responsibility is to process credit card transactions. In some cases, processor also settles funds to merchants. Often, processor is linked up with a merchant's website on behalf of an acquiring bank.

Settlement

Settlement is the last step in online payments. Settlement is the routine in which processor receives transactions with authorization codes. Once this is done, merchant gets his payment. If you have a credit card merchant account, you can accept credit cards over the internet. With more than 80% of all online transactions are paid for using online credit card payments, missing out in this front can have a negative impact on your business.