Generally merchants are less educated regarding functioning of the credit card processing. However, payment through credit cards is the most common and convenient form online. They must possess all he right information and knowledge of each and everything related to credit cards.

After swiping the credit card through the swipe machine, details related to the credit card and payment are sent electronically to merchant's acquiring bank, which contacts credit card issuing bank. In case transaction is approved, funds are deposited on the merchants account.

Similarly, in ecommerce Online credit card processing follows the same processing steps, and the payment gateway plays the role of a physical credit card terminal that swipes your card in a retail store. The payment gateway processes online payments in a secure way.

Thus, the whole credit card processing scheme for your online store usually works as follows:

At the very first, you need a merchant and payment gateway account so that you can start up with credit cad processing in your store.

Let's follow the sequence when a customer types his credit card number in an online store to pay for the order till he receives a response whether the payment went through:

1. When a customer places an order and types his credit card number on the secure site of any online store, than the store administrator checks the shopping cart details, which include order and billing information.

2. Shopping cart details along with merchant account are sent to payment gateway secure server for processing.

3. Payment gateway forwards transaction information to merchant's acquiring bank.

4. Merchant's acquiring bank forwards transaction information to the credit card issuing bank for transaction verification.

5. Credit card issuing bank verifies transaction and sends response code (Approve, Deny, and reason for denial if applicable) back to merchant's acquiring bank.

6. Merchant's bank forwards the credit card transaction details and response back to the payment gateway. If payment is approved, the bank will deposit funds on a merchant's account at the scheduled time.

7. Payment gateway sends transaction details and response back to merchant's online store.

8. Payment information is displayed to the customer; i.e. "credit card was charged", "credit card was denied", etc.

Fees will be charged at a certain processing stage from the transaction total. The amount of fees depends on a payment gateway used, merchant account, credit card type, and other factors; it usually adds up to be two to three percent of total charges.