Frequently Asked Questions

Q. Who's Involved with Internet Credit Card Processing?

A. Selling Products and services over the Internet involves four main parties:

• A merchant who is offering products or services for sale through a ecommerce enabled website. See our Alliance Partners
• A consumer or credit card holder.
• A merchant bank that has contracted with the merchant, to enable the merchant to accept credit cards over the Internet.
• An acquiring processor, the company that processes credit card payments for the merchant bank.

Cutting Edge Bank Card provides both the merchant bank and acquiring processor functions. Cutting Edge Bank Card processes merchants' credit card transactions through the financial network.

Q. How are credit cards used on the Internet?

A. The following information describes the step-by-step process of a credit card transaction taking place on the Internet.

Note: This information is for Merchants who may be unfamiliar with the process.

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. With the secured form, the payment information is protected by SSL as it is 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's bank account.

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Last modified: 2007-08-13T14:19:59-0700

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