Online credit card processing involves the consumer, merchant, credit card issuer, and payment processing company. Personal information is verified and transmitted through a secure network to prevent fraud. Transactions can be declined if there is a conflict with the credit card issuer’s database or insufficient funds. Once verified, the processing company deducts fees and sends the remaining balance to the merchant.
By following routine procedures, online credit card processing can secure payments for goods or services made with a credit card. Online credit card processing generally begins at the time of purchase by a consumer. Once a consumer authorizes a credit card payment on the website, a credit card processing company typically verifies the information with a credit card issuer to ensure payment. Once approved, the credit card processing company can deduct the processing fees and send the remaining balance to the merchant.
The infrastructure for online credit card processing typically requires a sophisticated system capable of processing online transactions in real time efficiently and securely. Each part of the system transmits information through a secure processing network in an effort to prevent fraud or theft. This complex system usually has checks and balances to prevent unauthorized transactions by hackers.
Online credit card processing typically involves five separate entities to complete the online transaction. The consumer, the merchant, the credit card issuer, and the company that processes online payments all play an active role in the transaction. A credit card transaction can take up to three days to complete from credit card authorization to receipt of payment by the merchant.
When a consumer makes a purchase online, most merchant sites require personal information to verify the consumer’s identity. The personal information provided is generally knowledge that only the consumer named on the credit card can provide. Along with the credit card number and expiration date, most sites also ask for a three-digit security code, which is usually found on the back of the card. For online credit card processing, the consumer enters this information, plus the billing address that receives the account statements.
The online processing system setup captures personal information for transmission to the credit card issuer for verification. The credit card issuer compares the personal information provided by the consumer with the information on file. If the credit card issuer confirms the consumer’s identity, the transaction process continues.
In general, the configuration of the processing network can reject transactions. A transaction is generally declined if the personal information provided by the consumer conflicts with the credit card issuer’s database. The credit card issuer may also decline the transaction if there are insufficient funds available to cover the purchase.
The processing company secures the payment once the credit card issuer verifies the buyer’s identity and available funds. Typically, the credit card processing company will debit the purchase amount from the available balance on the credit card. After deducting processing fees, the company sends the remaining balance to the merchant, usually through a business checking account.
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