How Credit Card Payments Work? Credit card transactions on the Net are essentially quite simple. The customer?s order details, including credit card details, are sent securely from the customer?s browser to the merchant. The credit card transaction is verified and the transaction approved or declined by the card issuer. If all is OK, the customer's credit card is debited and the merchant's account is credited with the proceeds of the sale. Simple? Well, not really. There is a multitude of complicating factors, both legal and practical. Although there are many companies offering a range of services which make the process easier, it can be difficult to work out exactly what is required for a small business. The two principal requirements are: 1) A bank account which can accept credit card payments (normally called a merchant account). 2) A service to authorize and handle credit card sales. What are Acquiring Financial Institutions? Usually these are banks. They provide merchant accounts and associated services. Note that not all Acquiring Financial Institutions will accept Internet credit card transactions. What are 3rd Party Processors ? college admission essay While some Acquiring Financial Institutions perform credit card merchant services in house, others contract the hard work out to 3rd parties and basically just act as account administrators. Some of these 3rd party processors will deal directly with merchants, enabling them to carry out credit card transactions but still use their custom essay normal bank accounts. What are Internet Credit Card Service Companies? These are the Internet transaction processing networks that carry out the processing and verification of the transactions over the Internet. The best known is Cybercash but there are others. How much does it all cost? The cost is highly variable, but Cybercash gives the following figures as a guideline to what merchants should expect to pay financial institutions for Cybercash services. A one-time service activation fee is expected to range from $300 to $800. Merchants pay monthly fees based on transaction volume. The expected monthly fees may include a monthly fee of $40 to $70 and/or a $0.10 to $0.20 per transaction fee. (A monthly minimum fee is normally charged). These charges are in addition to the discount fees and other fees charged by the financial institutions which can range from 1 per cent to 4 per cent depending on the institution, volume sales and average size of transaction. For more information on accepting credit cards, check out our sponsor at npmweb.com