Monday, January 9, 2012

How do payment gateways work?

        You know those machines where you swipe your credit card in restaurants and retail stores? A payment gateway is kind of like one of those, just without the need for a card to be present to be charged. It is literally a gateway between you, your client, your client’s credit card provider and your bank.
The main job of the gateway is to validate your client’s credit card securely, make sure the funds are available, and get you paid.
How Payment Gateways Work
   Some gateways also require what’s called a merchant account. A merchant account is essentially just a special kind of bank account that handles your funds received via credit cards. If you have a storefront or a retail business, and are swiping people’s cards, then you already have a merchant account.
Even if you do already have a merchant account, there’s still one step you should take if you want to start accepting online transactions. You’ll need to give your bank a call and ask them to set you up for an Internet merchant account. This is different from a regular merchant account, because it gives you the ability to process credit cards without the card being physically present for the transaction.

If you do not have a merchant account or are not interested in getting one (it can take some jumping through hoops to get set up), ECPSS can be a great way to start. ECPSS functions a little like a merchant account add-on for your existing bank account. You can collect credit card payments in your ECPSS account, then link it to a personal bank account (most people forget this step) to transfer the funds as necessary (note: not automatically – you have to specifically choose to transfer the funds).

   If you would like to get a merchant account (a good idea if you’re processing a lot of transactions), then all the payment gateways will help you get one. The process does require some paperwork, however, and a few days (two to five) for them to run the appropriate credit checks.


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