The Typical Transaction Process for an Online Merchant Account

January 25, 2017 by  
Filed under Business Services, Merchant Accounts

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A typical merchant account consists of two components: the first is the account itself, the second is the payment gateway that acts as the vessel to move money from place to place. You can think of the account like a car, and the gateway like a highway. Except this car is anonymous, it has a license plate that changes every time it takes a trip down the highway. In that sense, the merchant’s payment processor helps to move money from a customer’s account to the business owner’s. Here’s a more detailed breakdown.

Placing an Order

First, the customer places an order. If the transaction takes place in store, he or she will swipe their card at a credit card swipe machine; otherwise the customer clicks “Submit Order” or “Pay Now”. Once the order is placed, information is encrypted with Secure Socket Layer encryption.

At this stage, the merchant’s information is forwarded via payment gateway services. These services encrypt the data and transmit it to the merchant’s bank.

Once the bank that will issue the credit receives the information, it looks for the credit in the user’s account and authorizes the request based on the available debit amount. They send a response back to the cardholder’s bank, which signals the transaction is authorized and for what amount. That authorization travels through the gateway in about 2-3 seconds.


The merchant essentially receives an authorization, which functions a lot like an IOU. The difference is that funds are typically verified at the time of the transaction. The user may have overdraft fee protection, which allows them to authorize a particular card over its limit, but the process is otherwise limited to the cash the user has available.

Once the order is received, the merchant can start fulfillment. In store, the customer just goes on his or her way. Online, this can trigger the complicated process of shipping inventory across the country. All of the logistics behind this shipping are a completely different story altogether, but understanding how your merchant account fits into this process is important.

The primary takeaways are that these accounts allow for near instant fulfillment, equivalent to handing cash across the counter, but they are safer for both you and your customer. Within 3 days, merchants typically have the money transferred to their account and the transaction is completed entirely. offers the most affordable and secure merchant account solution available online.