How Credit Card Processing Works

Step One

When the consumer decides to buy something, the merchant's commerce application prompts the consumer for credit card information, usually along with other information such as a shipping address.

Step Two

The consumer enters payment information either into a form secured by the Secure Sockets Layer (SSL) protocol or into an application, such as Internet Explorer or Netscape Navigator. With the secured form, the payment information is protected by SSL as it is sent to the merchant.

Step Three

Using the payment software incorporated in the Web server, the merchant sends the encrypted transaction to the acquiring processor for authorization. The authorization is a request to hold funds for purchase.

Step Four

The acquiring processor either authorizes a certain amount of money (and issues an authorization code) or declines the transaction. An authorization reduces the available credit limit but does not actually put a charge on the customer's bill or move money to the merchant.

Step Five

If the transaction is authorized, a "capture" is the next step. The capture takes the information from the successful authorization and charges the authorized amount of money to the consumer's credit card. In line with bank card (Visa/MasterCard) association rules, the merchant is not allowed to capture transactions until the ordered goods can be shipped, so there may be a time lag between the authorization and the capture.

Step Six

If the consumer cancels the order before it is captured, a "void" is generated; if the consumer returns goods after the transaction has been captured, a "credit" is generated. Learn how chargebacks work here.

Step Seven

The final step is to "settle" the transaction between the merchant and the acquiring processor. Captures and credits usually accumulate into a "batch" and are settled as a group. When a batch is submitted, the merchant's payment-enabled Web server connects with the acquiring processor to finalize the transactions and transfer monies to the merchant bank account.

Using the NETbilling gateway to process your transactions provides you with security, convenience and control, as well as many additional tools designed to aid in your success, from numerous real time reporting features to variable fraud controls.

The NETbilling administration area is extremely comprehensive and useful tool. Our administration area includes an abundance of features which provides you with the most flexible and advanced processing abilities on the internet, and also doubles as an excellent customer management database.

Contact us to preview a few of the exceptional features within our system administration area. Contact us to have a NETbilling agent give you access to a live demo of our administration area.