This article series provides information about how ecommerce credit card processing works.

Nowadays millions of people use credit and debit cards to buy goods and services, but few understand how they actually function. In this guide, we'll explain the process in detail so you can learn the part you play as an online business owner. We'll teach you what you need to know, including how money moves from the cardholder to you, and how a payment gateway fits in. Then you can focus on what's important: making money and protecting yourself against loss.

Online Transactions

Online transactions behave in a similar way to retail transactions, but there is no opportunity to swipe a physical card through a reader or to insert it. In place of a physical card, the cardholder types the card data (number, cardholder name, expiration date, billing address, and security code) into a website form. And instead of a physical card reader pulling this data from the magnetic stripe or chip, software sends it from the form fields to the issuing bank to ask for authorization.

This software is called a payment gateway. Think of it as the online equivalent of a physical card reader. All other aspects of the online transaction funding process work the same way as they do in a card-present retail transaction. With Volusion, you can set up an account with the Stripe gateway and payment processing service in the Settings app. For details, see "How to Accept Credit Cards Through Stripe". You can also accept PayPal payments.

Once you're set up, all transactions work the same way. At the point of sale on your site checkout page, the gateway authorizes or declines the transaction with the issuer. For all authorized transactions, you have to manually capture the funds later during the order fulfillment process, after you've looked over each order for likelihood of fraud. Transactions then collect in an open batch as you capture them, and the gateway closes the batch automatically at the same time each day to begin the settlement process.

Proceed to Part 4: Credit Card Fraud
Return to Part 2: Behind the Scenes

For info about how to set up a credit card payment acceptance solution, see "Settings App: Payments". For information on how to process orders, see "The Orders App".

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