How Does Online Credit Card Processing Work?

How Does Online Credit Card Processing Work?
How Does Online Credit Card Processing Work? (Image: woodsy)

Bank Accounts

To use an online credit card processor, you will need to open two accounts. One will be your merchant account for your business and the other will be a checking account from your bank. After the transaction has finished processing, the money will be placed into your merchant account.

Payment Gateway

When customers visit your website, they will add the product to the shopping cart and checkout. The customers will then walk through the process of adding their mailing address and credit card information to complete their online shopping. The orders will be sent to the payment gateway to be processed. The transactions will be forwarded to the banks that issued the credit cards and they will verify the credit card and information that was provided on the order forms.


As the customers wait on the shopping website, the banks will make deposits into your business account, and inform the shoppers that their order was accepted. Some websites will display a tracking or order number that buyers will use to check on their orders. If the bank sends back information that the card has been declined, the website will notify the buyers that there is a problem with their card or the information that was provided.

Credit Card Processing Fees

Websites such as PayPal and Google Checkout offer a free and easy way to add a shopping cart and payment processing without the use of banks and merchant accounts. One reason to use these accounts is due to the fact that credit card processors charges fees to use their system. You will need to contact each processor because the fees will differ depending on the company. Some of the fees that you may need to pay include a onetime charge when you open the account and another charge for each transaction.

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