A payment gateway is the service that processes credit card transactions for you. When your customers are buying something from your online store they enter their credit card numbers during the checkout process on your website in your shopping cart. Your e-commerce site sends that credit card information to your payment gateway to authorize the transaction and process the payment. If the credit card information submitted to the payment gateway matches the information on file with the credit card company and the charge is approved, the payment gateway will then transfer the money from your customers credit card into your merchant account.

The merchant account is basically an online bank account that will temporarily hold your money (you are the merchant) until it is moved into your actual bank account. After a successful sale, money will be transferred into your merchant account and it will sit there for a few days, usually 2 days, then, in most cases, it will automatically be transferred into your bank account – the one that you actually think of as your bank account where you deposit checks and so forth. You can sort of think of your merchant account as a temporary holding tank for the money that comes in from online sales.

Posted in: General Merchant Account Questions