Merchant Payment Processing's Role in Online Transactions

2007-11-09 05:11:17

( Financial )



Although there are various methods of payment that shoppers can choose when they buy merchandises on the Web, nothing beats the use of credit card in online transactions. Thus, if you are a merchant who is planning to sell goods and services online, a basic understanding of the merchant payment processing system helps to manage your online store effectively. When your e-store will accept credit card payment such as a MasterCard online payment or Discover card payment, you have more chances of generating sales in the process.

To accept online payment, you need the services of a company that caters to online merchant payment processing. These companies will supply you with software that you have to install on your secure server. When your customers purchase an item on your site, they will be asked to provide their credit card number. After the number has been entered, your secure server initiates access to the software of card payment services.

To complete the transaction, the merchant payment processing service authenticates the information that your customer entered into your Web site. If the information is correct, a confirmation of the transaction will be provided to you. As part of the obligations of the merchant payment processing companies, the money debited into the customers' credit card will then be deposited in your bank account.

You would also need to open an internet merchant account with an acquiring bank. An internet merchant account lets you accept online payment using the credit card processing network. In addition to a discount rate for processing each online credit card payment transaction, acquiring banks also charge you an application fee to set up the merchant payment processing account. Application fees and discount rates vary among acquiring banks. Hence, it is wise to shop and compare the fees and services that acquiring banks offer.


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