Ecommerce Credit Card Processing

Credit Card Processing is the method of processing the payments made through the credit cards. It is mainly done online and hence is also known as the Online Credit Card Processing. The e-commerce websites too processes payments via credit cards and thus is also known as E-commerce Credit Card Processing.

Credit Card Processing is the method of processing the payments made through the credit cards. It is mainly done online and hence is also known as the Online Credit Card Processing. The e-commerce websites too processes payments via credit cards and thus is also known as E-commerce Credit Card Processing.

Credit card processing is mainly done through merchant account which allows a merchant or business owner to accept payments through credit cards in response to the sale of goods and services. For this the merchant needs to open a merchant account which can be done either through a Merchant Bank or a Merchant Service Provider (MSP). Merchant account is not a free one but includes various types of charges such as monthly charges, interchange fees (which is a percentage or per item charge). Transactions are not homogeneous in nature and involves different categories such as retail orders, mail orders, telephonic orders, online orders, etc. Thus the rates charged are also differentiated. Thus the credit cards also have differentiated fee structure depending upon tier of interchange.

In addition to the above charges there are also some additional charges involved such as Authorization fee, monthly minimum fee, state fee, chargeback fee and batch fee.

There are basically two types of credit card processing :-

1. Credit card terminal

Credit card terminal is a electronic equipment in which the merchant or the business owner swipes the credit card or enters additional informations through typing the keys present on the terminal machine. Credit card terminal machines require electric or battery power for functioning. The informations can be transmitted from the terminal point to the main processing unit through telephone line, cellular services, Internet and wireless.

When a credit card is swiped by a merchant in his terminal then the card informations are passed to the main processing unit for verification for charging the card. But the actual charging is not done instantaneously but at the end of the day when the total sales per terminal is discharged.

2. Payment Gateway

It is a typical e-commerce ASP service (Application Service Provider or ASP is a typical and advanced computer based business which provides network-based services to the customers) equivalent to a physical Point-of-sale (POS) terminal. This system is located in almost all of the business outlets. In these terminals sensitive informations are encrypted (for example, credit card number) which ensures secured and secret passage of information between customer and merchant. Payment gateway helps in secured, secret and quick transferring of informations between payment portal (website) and acquiring bank or company.

Payment Gate is a third party service where verification, acceptance or declination of any credit card takes place online. It is also known as IP payment gateway. The entire process is done on a real time basis through the help of Internet.

Credit Card Processing can be done either on a traditional basis or online. It helps in secured verification and acceptance/declination of credit card payment. Credit card market is going to see more advancements in credit card processing in the near future for faster and more secured processing.