Credit Card Processing
How does it work?
This can be one of the more confusing areas of the whole
Internet payments processing function. It turns out it's not too bad to
understand if it's broken down into steps.
A Tale of Two Accounts
You have two accounts. One is your regular bank
account, usually a checking account. This is where the money winds up
when the process is complete. The second is your merchant account. This
is the account that processes the credit cards you receive. Your merchant
account may be with the same bank that you have your regular bank account
with. Frequently, it's not.
Banks that specialize in handling merchant accounts,
especially for internet merchant accounts, are usually easier to deal with
when setting up a new account. When I say "easier to deal with"
I mean they require less paper work and they give you a faster response.
At the bottom of this write up you'll find a list of Merchant Banks we
Two other participants are involved in the
transaction as well. Your 1CartPlus shopping cart and a credit card
There are four independent "partners" in the
You and your regular bank account. You're
selling the goods and services to your customer. The customer's
payment winds up in your bank account.
1CartPlus is the shopping cart the gets your
customer's payment information in a secure manner so no one else can
see it. After it's collected, 1CartPlus connects to the credit card
processor and passes the information to them and waits for a response.
After processing is completed, 1CartPlus receives the response from the
credit card processor with the accept or decline of the credit card.
The credit card processor is an intermediary
between 1CartPlus and different banks that work with them. The credit
card processors provide the "plumbing" that allows your
customer's information to flow from 1CartPlus to the bank that hosts
your merchant account. It also works with the bank that issued your
customer's credit card to verify the account and accept or decline the
The bank that hosts your merchant account is
the financial institution that actually provides the bank-to-bank
processing of the transaction. They send a transaction to your
customer's credit card bank taking the money from (or adding the money
to the balance of) your customer's credit card. They then deduct their
processing fees and send the balance to your bank account, which you
see a couple of days later, and the loop is complete.
Here's how it works
When your customer checks out at 1CartPlus,
by entering her credit card number we communicate with the credit card
processor (the information is encrypted so no one can see the credit card
number). The credit card processor figures out what bank issued the card
and calls it electronically to ask if the card is ok. The issuing bank
(i.e. your customers' bank) checks the account and sends a Yes or No to
the credit card processor.
When the credit card processor receives the
response it passes it back to the shopping cart. The shopping cart tells
the customer what the response is and continues doing its processing,
sending emails, etc. If the answer is Yes, the
credit card processor records the transaction for processing later in the
Once a day the credit card processor wraps
up your transactions for the day into a "batch". It tells each
of the issuing banks (your customers' bank) how much to send to your
merchant account. This is all done electronically, of course. Your
merchant account now has the funds from each of your customers' purchases.
Usually about two days after the original
sale the money is transferred to your bank account. Transaction fees have
been deducted which sometimes makes it a challenge to figure out what was
deposited and when. A $100 sale winds up as a deposit of $97.28 or some
Different merchant account banks work with different
credit card processors. We have several credit card processors we work
with. Check them out and compare the rates. We have chosen those that we
feel offer competitive rates and provide excellent service. If you're
working with a credit card processor that we don't currently support, let
us know and we'll see about adding them to our list.
here to see the Credit Card Processors we work with currently.