Payment processing in the online world is similar to payment processing in the offline or “brick-and-mortar” world, with a few exceptions. In the online world, the store and the transaction are virtual. This means that the card is “not present” at the transaction and that the transaction information is submitted and processed via the merchant store network. Because of this, merchants are held liable for fraudulent transactions by the credit card associations.
Merchants must take additional steps against online fraud, including verification that the card information is being submitted by the actual owner of the card and protection of their store and network infrastructure from hacking attempts. Payment processing can be divided into two major phases or steps: authorization and settlement. Authorization verifies that the card is active and that the customer has sufficient credit available to make the transaction. Settlement involves transferring money from the customer’s account to the merchant’s account. Online payment processing may also
allow you to set up automatically recurring billing payments, if your payment processing service provider offers this feature.
