Online Financial Tips

The path that credit card data takes when it leaves the terminal on your store counter is a bit different than what happens when people shop online. While the paranoia factor has decreased as an increasingly large number of businesses have gone online, credit card processing for Web stores has remained largely a mystery. It’s time to shed some light on what goes on behind the scenes online merchant accounts..

1. The Customer places an order. All orders should be taken on a secure web page to protect the customer’s information and your reputation. All data being transmitted should be encrypted.

2. The shopping cart program goes to work. The data is compiled in a format that the credit card processing company expects and can translate.

3. The information starts its journey. The data is now transmitted from the host – your website – to the processor, or payment gateway. The gateway checks to make sure that all necessary information has been included in the transmission and determines where to send the data next.

4. Validation. The credit card company checks all the account information and, assuming all is in order, approves payment. If something is amiss, then a code is sent back that explains the rejection.

5. The gateway confirms the transaction. The shopping cart is informed if the card was validated and the funds were available for transfer and the process of transfer is initiated. If the funds were available, the customer is told the transaction is completed. If not, the reason for refusal is explained.

6. Funds are moved. Assuming that all went well, the Internet merchant account collects the funds and holds them for an agreed upon period of time before transferring them into the merchant’s account.

As you can see, there are a couple of different steps but the result is the same. Your sales are transmitted safely, funds are validated, and the transaction completed. All this takes place during that time when the customer is sitting and waiting – and not submitting payment again – in front of their computer for their confirmation number. When you consider how much happens behind the scenes, the speed at which these transactions are complete is incredible.

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