E-Commerce Information for Gateways and Merchant Accounts to Accept Credit Cards online

What's a Gateway?

Gateway: The interconnection between two networks with different communication protocols.

The key components typically involved in taking a credit card online are: the cardholder ( online shopper ) , the merchant ( The web site owner ) , the acquiring bank processor, the card-issuing financial institution, and the merchant bank.

The cardholder is the owner of the credit card, while the shopper is the one who visits your store in search of stuff to buy ( merchandise ) .

The most popular brands of credit cards available today are Visa, MasterCard, American Express, and Discover.

The merchant is the one who operates online store. In order for the merchant to accept credit card payments online, the merchant will need a merchant account with an acquiring processor and a bank account at a financial institution ( the merchant bank). The merchant also needs to have an online software application ( Shopping Cart ), as well as payment processing server software ( Secure Merchant ) . Payment processing server software provides the interface from the merchant to the credit card financial processing network.

The acquiring bank processor ( also known as the acquiring financial institution), acts as an go between, between the merchant, card-issuing banks, and merchant banks. The acquiring bank processor has the task of actually processing the credit card transaction data. The acquiring bank processor is responsible for depositing the daily credit card sales into the merchant account after deducting any applicable bank processing fees. Before a merchant can accept credit card payments, the merchant needs to have a merchant account with an acquiring bank processor. An acquiring financial institution contracts with the merchant to enable the acceptance of credit card transactions.

Acquiring financial institutions must manage the financial risks associated with their credit card merchant accounts. Some of these companies have very stringent acceptance criteria for the establishment of merchant accounts. This may seem like an inconvenience at the time of setting up an account, but in the long run it will beneficial as online clients will gain some confidence and trust in seeing the secure logo of the acquiring financial institution.

There are companies online that are just Gateways or just Merchant Accounts or just Financial Institutions and then there are 3rd party companies such as Paypal that just transfer funds from one account to another. Although Paypal is an inexpensive and simple solution, it also is very easy for anyone to get. Unfortunately, because Paypal does not put the online store through the microscope like other merchant companies do, there is no trust in the merchant for the online client like there is in other companies.

An online merchant account that puts it all together including Verified by Visa (an extra security step against Credit Card Fraud ) Canadian and US accounts is the one we use - Internet Secure . Internet Secure is easy to set-up with any Shopping Cart and all email ( Invoices etc. ) sent to online clients is very professional in appearance and information.