Merchant Processing 101:
Shopping Carts, Gateways and Payment Processors: Anatomy of an Online Purchase
By Erin Kroll PR/VAR Marketing Coordinator e-onlinedata
Years ago, an exchange of cash was all it took for a customer
to make a purchase from a merchant. How things have changed! Today, most businesses offer their
products or services on the Internet clearly, they can’t be restricted to cash-on-delivery
practices anymore. E-commerce has emerged as a lucrative channel for merchants to boost sales and
grow their bottom lines. Many consumers have Internet access both at work and at home, and
browsing an online catalog can be faster than browsing the aisles of a physical store and
customers get the added convenience of shopping 24 hours a day, seven days a week.
Merchants should understand the value of operating in multiple channels. For those who haven’t yet
incorporated e-commerce into their business but want to, there is much to learn. They must educate
themselves on how payment processing works in order to best accommodate their online shoppers and
serve the needs of their business. Though paying for an online purchase takes just a few seconds,
it involves a complex chain reaction of behind-the-scenes processes.
Merchants can increase revenues and reach more customers by offering an efficient, successful e-
commerce solution. This article examines what must be in place in order to complete a transaction
that is both secure and offers superior customer service.
What Makes an E-Commerce Solution Possible? In addition to the range of software and hardware that
companies use to support the sale of products and services online, there are three vital
components that make online shopping possible: the shopping cart, payment gateway and payment
processor. Each is critical to ensuring successful implementation of e-commerce functionality.
Shopping cart. The shopping cart acts quite literally as a virtual shopping basket. It holds the
items customers select from a Web site until they are ready to proceed to the checkout stage,
where their credit card information will be processed. The shopping cart: o Keeps track of items
until they are purchased o Automatically totals the amount of a customer’s order, including
shipping and tax o Allows shoppers to securely enter address and credit card information
Payment gateway. In order to accept credit cards through the Internet, a payment gateway is
critical to transport the credit card information from the shopping cart to the payment processor
once the consumer clicks the Buy button. In most cases, this transaction happens almost
instantaneously. The payment gateway receives encrypted transactions from the merchant’s shopping
cart. An encrypted transaction simply means that credit card numbers can’t be read by people who
are not supposed to read those numbers. Authentication is then provided and the decrypted payment
information is transmitted for authorization. The payment gateway: o Fulfills the same function as
a point-of-sale (card swipe) terminal at a physical retail location o Takes information provided
through a shopping cart and transmits it electronically and securely to a payment processor to be
routed for authorization of payment
Payment processor. The payment processor transmits a customer’s credit card information via the
Internet to the merchant bank for authorization. It also sends data back to the merchant’s bank to
approve payment or the transfer of funds. Specifically, a payment processor: o Acts as a link from
the merchant to the acquiring bank or merchant bank o Receives information from the merchant
through the payment gateway and packages the information for delivery to the acquirer, ensuring
that all necessary transactional data is present and valid o Later transmits information back from
the acquirer for delivery to the merchant to settle the transaction
With the shopping cart, payment gateway and payment processor in place, merchants have all they
need to offer convenient e-commerce solutions that deliver superior security and service. With a
little research and education, merchants can find the best providers to accommodate their business
needs and those of their consumers. It just makes sense with online shopping projected to
account for $116 billion, or five percent of all retail sales this year e-commerce provides
merchants an opportunity to make more money and succeed in an increasingly competitive
marketplace.
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e-OnlineData Payment Solution
e-onlinedata
Accept credit cards and get paid quickly with e-onlinedata, an internet-focused merchant account
provider. They make fast, secure transaction processing for e-commerce companies more efficient
and cost-effective. And because e-onlinedata handles all aspects of payment processing, including
fraud prevention, all you have to worry about is building your business. Learn more about the
e-OnlineData Payment Solution
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