|
STEPS IN TRANSACTION PROCESSING
Authorization occurs at the time of sale. Processing network receives authorization information from merchant terminal (physical or virtual) and checks databases of the financial institution which issued the card for available balance. Reduces "available balance" but no money changes hands. This authorized transaction is stored in a local database called a batch.
Settlement occurs at once per day if any authorizations have accrued for that business day. A settlement may be required to be performed at a specific time. When settlement or auto-settlement have been executed, the transaction, minus any merchant fee's, will have been approved for transfer to you bank account. Settled batches, or closed batches, are stored for later access. Funds arrive in less than 3 business days.
Software or CGI scripts used to store products and orders.
An internet connected web server to allow 24/7 high speed access to the storefront.
A banking account under a certified DBA.
A bank or merchant processor who has access to internet connected processing network to enable high-speed/real-time authorization.
A high-speed provider with access to processing network (e.g. CyberCash, Authorize.net, cardservice.com - linkpoint gateway). Some banks or merchants may provide Gateway services, and some Gateways may provide merchant services.
REAL-TIME GATEWAY INTERACTION (Point Of Sale)
Using HTML in your webforms, a credit card purchase form is integrated as a step into the order process. During this step, the customers browser is redirected to the Gateways secure website and the form is verified and the purchase is finalized. Some Gateways servers will return the customer to a specified page on your website.
Using scripts, programs, and libraries that may come in a variety of different program languanges an Application Programing Interface (API) is available to perform the various tasks required for operating a merchant account (e.g. batch management, credit card authorizations and purchases, etc.). Using the API the Gateway interaction is done directly in the Storefront/Shopping Cart program; therfore, there is no need to go to the Gateways website and the form, functionality, and presentation may be completely customized.
ALTERNATE GATEWAY INTERACTION
A website that allows for credit card purchases, batch management, and other account functions. The virtual terminal is available securely through any web browser for phone, fax, or mail order purchases. A virtual terminal is frequently utilized in conjunction with Real-Time Gateway Interaction operations in order to perform batch management functions which do not occur at the POS.
PC software that allows for credit card purchases, batch management, and other account functions. The software must be installed and used on a PC with a modem. Authorizations and batch executions are performed through the modem. PC Terminals are not inherently Internet enabled.
Hardware equipment used to swipe cards and print receipts. Swipe Terminals are not Internet enabled.
COSTS/FEES
All costs and fees may or may not be billed by a company separate from your merchant services provider or bank (e.g. Terminal service provider, Gateway provider, or Merchant provide). Fee's may be itemized or consolidated. Individual plans may vary.
Monthly lease/service fee for using a POS terminal. If you have multiple terminals types you may have multiple fees. A terminal may or may not be provided by your merchant services provider or bank.
To process through a Gateway you will be charged a monthly fee by the Gateway. The fee may be included with the cost of the terminal or may be charged independently.
Monthly fee of utilizing the merchant services. This fee may include the Gateway and Terminal usage fees if your merchant is also providing these services.
The following fee's may be charged by any service provider in the transaction chain (e.g. Terminal Provider, and/or Gateway Provider, and/or Merchant Services Provider)
A flat rate per transaction fee applied to all transactions.
A varying per transaction fee applied to all transactions taken as a percentage of the total transaction amount. Merchant discount rates range from <1.0% (low risk) to >%4.0 (high risk).
Cost for applying for merchant services. Acceptance is not guaranteed.
Cost required to setup the merchant services account.
Amount charged per batch execution. Batch fees may be different based on batch function and size of batch.
Penalty can be applied when failure to meet a variety of terms in the contract, including:
- batch not executed properly
- batch not executed on time or at specific time
- not meeting/exceeding requirements for: service balances, transaction amounts, transaction counts, etc.
- check the contract(s)!
PER TRANSACTION FEES ONLY MERCHANT SERVICES PROVIDERS
Some Merchant service providers such as PayPal allow for individuals to accept credit card purchases. Usage and transaction fees are applied to each transaction thereby eliminating monthly and batch fees. Currently, most of these providers do not interact with Storefronts and it may be undesirable to require ordering be a seperate operation than paying.
REFERENCES
http://www.netbilling.com/
http://www.paypal.com/
http://www.cybercash.com/
http://www.ibill.com/
http://www.authorize.net/
http://www.virtualschool.edu/mon/ElectronicProperty/klamond/credit_card.htm
http://www.plugnpay.com/
http://www.itransact.com/
http://www.internetsecure.com/transaction.html
http://www.chargegateway.com/index.cfm
http://www.cardservice.com/
