What is online payment processing?

About Online Payment Processing

Generally speaking, online payment processing refers to “real-time” processing of credit card transactions through your website.

Real-time processing requires little or no intervention by the Merchant, and is ideal for businesses in need of processing hundreds of orders per month. Credit Card numbers are received through the Internet and cleared by a service such as the Authorize.net online processing module. When a customer purchases products from your site with a credit card, you or your site’s software will request approval that the card is valid and that sufficient funds are available in the customer’s account for the purchase. On approval, the bank will reply with an authorization number and the order will be officially “captured”. In the next step, the merchandise or service is sent to the customer and the Merchant informs the bank where the Merchant Account is held. The bank then deposits funds into the Merchant Account as the customer’s account is debited the cost of the products. The bank of your Merchant Account will remove the necessary service fees and complete the transaction.

Alternatively, offline processing entails some labor on the part of the Merchant, but is easiest to adapt an existing business, and is generally more affordable for smaller Merchants. In this case, a business’s current credit card processor will suffice. With this method, the credit card information that is placed in the order is simply stored in the encrypted order logs for the Merchant to download at their convenience. The software does not “talk” directly with the bank to pre-authorize the card; instead the Merchant downloads the order information from the website and uses their in-house terminal to process the charges.

Examples of Payment Gateway Services

Although we do not directly endorse or manage these services, these are some common examples of online payment gateway and/or online payment processing solutions. The fees and functions of these solutions may vary. Contact each provider directly for details.