Making purchases over the Internet involves four main parties: the consumer or credit card holder; the merchant who is offering products or services for sale; the merchant bank that has contracted with the merchant to enable the merchant to accept credit cards over the Internet; and the company that processes credit card payments for the merchant bank, known as the acquiring processor. (The acquiring processor processes merchants' credit card transactions through the financial network on behalf of merchant banks.) One other party is involved, the issuing bank that has issued the consumer's bank card.

The consumer interacts with the merchant's Web site by using a Web browser such as Netscape Navigator. To make credit card purchases, the consumer must obtain a bank card from an issuing bank and, when making a purchase, provide bank card information to the merchant's commerce application.

The merchant's commerce application makes goods and services available for sale over the Internet by payment-enabling the merchant's Web server application. To accept credit card payments over the Internet, the merchant must have an account with a merchant bank that offers Internet credit card processing. The merchant bank may also function as the acquiring processor to move the credit card transaction through the financial networks; or it may designate another company to function as acquiring processor on its behalf.

Steps In An Internet Credit Card Transaction

1. When the consumer decides to buy something, the merchant's commerce application prompts the consumer for credit card information, usually along with other information such as a shipping address.

2. The consumer enters payment information either into a form secured by the Secure Sockets Layer (SSL) protocol or into an application, such as Netscape Navigator, that is compliant with the Secure Electronic Transactions (SET) specification. With the secured form, the payment information is protected by SSL as it is sent to the merchant. With SET, credit card information is enclosed in a "slip" - an encrypted, electronic analogy to a paper credit card slip. The slip is then sent to the merchant.

3. Using the payment software incorporated in the Web server, the merchant sends the encrypted transaction to the acquiring processor for authorization. The authorization is a request to hold funds for purchase.

4. The acquiring processor either authorizes a certain amount of money (and issues an authorization code) or declines the transaction. An authorization reduces the available credit limit but does not actually put a charge on the customer's bill or move money to the merchant.

5. If the transaction is authorized, a "capture" is the next step. The capture takes the information from the successful authorization and charges the authorized amount of money to the consumer's credit card. In line with bank card (Visa/MasterCard) association rules, the merchant is not allowed to capture transactions until the ordered goods can be shipped, so there may be a time lag between the authorization and the capture.

6. If the consumer cancels the order before it is captured, a "void" is generated; if the consumer returns goods after the transaction has been captured, a "credit" is generated.

7. The final step is to "settle" the transaction between the merchant and the acquiring processor. Captures and credits usually accumulate into a "batch" and are settled as a group. When a batch is submitted, the merchant's payment-enabled Web server connects with the acquiring processor to finalize the transactions and transfer monies to the merchant bank account.

Using the NETbilling gateway to process your transactions provides you with security, convenience and control, as well as many additional tools designed to aid in your success, from numerous real time reporting features to variable fraud controls.

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Please click here to preview a few of the exceptional features within our system administration area, or click on the admin tuturial link in the menu to the left. When you are ready, a friendly NETbilling sales representative will gladly give you a personal one on one walkthrough of our actual administration area. Please contact us anytime for assistance.