Getting Paid Using Web Credit Card Processing

Web credit card processing can seem a little daunting at first. After doing a little research, you learn that there can be several companies involved in getting a web site set up to accept credit cards. Unfortunately, many of the sites that you visit to learn about online credit card processing don't necessarily do a good job of answering a few basic questions or explaining how to get started. One of the most important questions that an online merchant needs answered is, "How long does it take to receive the payment?"

Before that question can be answered clearly, you first need to understand just some basic information about how web credit card processing works. Processing credit cards on the web is just an extension to the process that brick-and-mortar retailers have used for decades to process customers credit cards. The following is a brief explanation:

Merchant Bank

The brick-and-mortar retailer is able to accept credit cards because he or she has a merchant bank account. All retailers' credit card transactions will go through the merchant bank, which will usually provide the store a small credit card terminal. The credit card terminal is the small, calculator-sized machine that a store clerk uses to read your card number.

How Credit Cards are Processed

The credit card terminal sends the credit card information to the merchant bank's processor. The processor then uses the appropriate credit card network, such as MasterCard or Visa, to validate the credit card information. They check the credit card at the customer's bank to validate the card number and see if there is enough credit to cover the purchase.

Once the merchant bank's processor receives the result from the customer's bank, they send it to the terminal in the store. The cashier will see the confirmation or denial and take the appropriate action.

How Web Credit Card Processing Is Different

Web credit card processing is essentially the same as described above, except for one main difference. Instead of using a credit card terminal, the retailer's web site will connect to a credit card processing gateway. The gateway will then connect to the retailer's merchant bank and the process proceeds from that point exactly like it did for the brick-and-mortar retailer. When the gateway gets the result from the merchant bank's processor, it is sent to the retail web site and the transaction is either completed or denied based on those results.

Getting Paid

You may have realized that no money was transferred during the process described above. The retailer receives no funds until the transaction is settled. Settlement occurs when the customer's bank sends the funds to the retailer's merchant bank account.

It takes anywhere from 2 or 3 business days for the funds to be transferred to the retailer's account. During the time it takes to settle the transaction, both the retailer's bank and the customer's bank are looking for indications of credit card fraud. Once the funds are in the merchant bank account, they can be automatically transferred to your business checking account.