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.
SettlementSettlement 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. |
