Credit Card Processing Basics

A customer comes to your website looking for the goods or services that you provide on your website. That customer then decides to purchase your product or services through your website.

At this point the customer goes through your shopping cart and adds a particular item or service to their shopping cart. They finalize their shopping experience by clicking on your button that says "Buy Now" or "Pay Now", etc. At this point the customer fills in their information for shipping and billing purposes. Usually at the end of the order form they will be asked to fill in their credit card information.

When the "Submit Payment" is clicked there is a request electronincally sent to the network that does your credit card processing that does an authorization to capture funds with the credit cardholder's credit card account or bank account information for the amount of the purchase. This is the same process that a credit card would go through for retail credit card processing. The customers credit card is swiped through a credit card processing terminal.

If the credit card processes valid and the funds are available the network will send back an electronic response in the form of an authorization code. These codes are then stored in a batch file to upload at a later time of the day, usually at the close of business.

Usually within 48 to 72 hours the funds from your settled batch are deposited into your account electronically. Your transaction fees are normally deducted from from your deposit before it's electronically deposited in your account. In some instances your merchant account service provider will allow you to pay all your transaction fees at the end of the month. You will receive a statement of credit card activity at the end of every month.