This article is an addition to the large one about payment options and is to explain how online payment method (e.g., credit card processing) actually functions
Online payment method is considered an immediate transfer of the money, paid for the goods, to your payment account.
The process of receiving money involves three parties:
- your store,
- payment gateway: special system, located outside your store but connected to it on programming level, that processes your customers' credit cards and does charging
- your merchant account at the payment gateway connected to your bank account
When the buyer clicks "Continue" button on the last checkout step, they are redirected to the secure site of the payment gateway where they submit credit card information, or sign in to their PayPal account, and confirm the payment. At this very moment Online store transfers the customer and order data (order total, tax amount, shipping cost, shipping/billing address) to the payment gateway.
The payment gateway connects to the card issuer, the card's data is verified (or PayPal verifies the accounts if the customer pays with their PayPal account), then either the money is charged or the transaction is declined (e.g. there's not enough money on the card).
The payment gateway then sends the transaction confirmation back to Online store. Online store accepts it, sets the corresponding order status in the control panel and dispatches email notifications to the store owner and the customer.
If the transaction is successful the money is put to your merchant account you have with the payment, who then transfers the funds to your (bank) account.
The data transfer and transaction confirmation is performed via special secure channels setup between your store and payment gateway, the operations are fulfilled in background.
This transfer is ensured by special settings in your account at the payment side. For example, in PayPal Standard it is Instant Order Notifications, in Authorize.Net - Relay Response URL, etc. Every payment has such a setting. That's why it is so important to fulfill all the steps enumerated in our knowledge-base to setup payment methods!
The order details are stored in your Control panel, on page 'Sales' page.
From the customer's view it looks thus:
click 'Continue' button, redirected to the payment site (for ex., PayPal), types in credit card details or login to PayPal, confirms the data and payment, redirected back to the store and see 'Thank you for your order' page with the order details and invoice.
Or there're online payment methods that allow keeping the customers in the store: the payment form is shown right on the last checkout steps, it's pulled out from the payment gateway side and displayed in a frame. And technically the charges are still processed on the payment side. PayPal offers such payment methods: PayFlow Link, Payments Advanced, and PayPal Payments Pro Hosted. One more very popular payment is American Express.
Your online store must be programmed to be connected to a payment gateway. You don't have to do any programming, as we did all necessary coding and integrated many payment gateways (see here for the full list).
Thus Online store does not process your customer's credit cards. It relies on known and trusted payment gateways who are able to provide necessary high security level for these operations.