1998 (With 2000 or so), I worked for small businesses (called PaymentNet/then Signio) managed online transactions. VeriSign bought later this company and the product team I led the integrated "front-end" the part that took the credit card information and sent it to our servers for processing. Product's name is Payflow Pro, you might have heard of it?
I will limit this discussion to show/MasterCard credit cards--Amex and other works a bit differently.
The first is the bank that the consumer's credit card is linked to. This bank is known as the "acquiring institution" ... it handles "credit"-you have on your credit card.
It is, therefore, the merchant bank. This is where the business is opening a handelsfartyg account to accept various forms of credit cards.
Merchant account is connected to another company called a "processor". This "hidden" layer is the company that actually moving funds from the acquiring institution to the merchant account (known as the "solution"). The processor handles also speak with the acquiring institution to ensure that the customer has funds available (a process known as permit).
Some well-known credit card processors is the first Data Merchant Services (FDMS), Nova and PaymentTech.
Sitting on the processor is one of two primary systems, either a swipe-card terminal (like those you see in Wal-Mart) or a "gateway" companies doing essentially the same thing, but on the Internet-that's what Verisign payment services and Authorize.Net.
Note that the waters are even muddier in many cases, such as Wells Fargo can serve as each bit confused in some circumstances.
So what is actually happening when you buy something at Wal-Mart uses a credit card?
(a)), you place your items from "basket" to counter and scan them Treasury system provides total.
(b)) you pull your card via a "terminal", which reads # outside the magnetic stripe.
c) Wal-Mart calls up their processor and ask if you have the available funds on your credit card. CPU calls to your bank (the acquiring institution). If funds are available on the card, they are marked as "held" in your account (permit), unless the transaction is declined (yuk). Authorizations are resolved never to tie up your credit card funds over a period of time, usually 10 days or so.
(d)) at the end of the day, select Wal-Mart all transactions they want to receive money and sends them to their processor in a "party". The processor then contact the recipient institutions and transfer of funds to your merchant bank-which may make the funds available immediately (in a day or two), can keep them for a while or may hold funds in a "rolling reserve" (to keep certain assets back in the event that a consumer is fighting the transaction is called a chargeback).
Replace cash register in the online world, with an online shopping cart and the electronic credit card terminal with is called a "gateway" for example, Payflow or Authorize.Net. the process is basically the same, with a little more complicated.
Be sure to "a la carte" with e-commerce credit card services: If the port you chose not to speak to the processor and your bank uses, or your software can not talk to the gateway, you're hosed. The situation was much more common (things don't work together) back in the mid/late 90 's than it is today. Most of the "first and use" banks (such as your local branch) has, however, still not a clue about online credit card processing ... If they try to sell a "rented terminal", it is best to run the other way and find a solution from the reputable source on the Internet.
As an online merchant does accept credit cards, you need to really know is that all of the services through a single solution will usually together seemlessly.
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