When a person opens an online business and applies for a merchant account, they may not realize the steps needed to create an ecommerce site. In most cases, for an online business to accept credit cards as a method of payment, they need to have a merchant account and a payment gateway.  The following information will briefly describe the functions of a payment gateway.

If you think about an online store the way you do a regular store, you can think of the payment gateway the way you do the machine that you scan your credit card through.  When an online customer enters his credit card information into your website and clicks send, it goes through the payment gateway just as if he had swiped his card through the credit card machine at the store.  The payment gateway will then:

  • Check the validity of the credit card
  • Determine the issuing bank
  • Determine if the funds are available
  • Report the information back to the retailer

Once this is done, it is your website’s job to inform your customer of the money to be deducted or charged to the credit card and distribute the goods or services that were purchased.

There are several different types of payment gateways available to online merchants. It is important to do your research to determine the type of accounts that may work best for your online business.  There are even payment gateways that offer services such as fraud detection abilities, virtual terminals, and deal with monthly reoccurring fees.

If you are starting an online business, or if you have an existing online business that requires a payment gateway in order to accept credit card payments, you are not alone.  There is so much available if you just search and ask.  A reputable merchant account provider can give you a variety of options; compare what is offered and make the best choice for you.

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