How Internet Credit Card Transactions Work
The online customer finds the merchant's website and then selects products (or services) to purchase. The customer then adds the products/services to the shopping cart. When they are finished shopping and ready to check out, they enter their credit card billing information. The credit card information, along with the billing and shipping information, is then passed through the payment gateway to the credit card processor.
The credit card processor then passes the information over a secured gateway to the bank that issued the credit card to the customer. The customer's "issuing bank" then verifies that the card is valid and that the amount requested is available on the customer's credit card.
The bank then sets aside the purchase amount for the merchant, then sends an approval number (or a decline message) back to the processor which in turn transmits that information to the merchant.
This entire process takes approximately 3-15 seconds to complete.
An approval code is then email to the merchant. At this point, the merchant can also choose to have the payment gateway email the customer a payment receipt.
The transaction is now completed. It usually takes two business days from the time of the original transaction for the funds to reach the merchant's checking account.
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