Commercial shopping carts usually offer the online customer a number of options. An Internet merchant usually chooses the shopping cart and web site hosting company. Then the merchant sets up a merchant account based upon the gateways that are available with that particular shopping cart. This differs from purchases at a brick-and-mortar store because usually, Internet merchant accounts do not hold funds for an extended length of time, as does a typical bank account. Instead, transactions are usually immediate and take place daily.

These shopping cart programs collect the customer’s order information and send it to the credit card processing company to process. The credit card processor then sends it directly to the credit card company, which validates the card and the account. The credit card company then let the credit card processor know that the appropriate amount can be transferred. If a transaction is denied, it is assessed a code that alerts a credit card processor that the transaction has been denied and the reason for the denial.

Once the transaction has been approved, this information is sent to the shopping cart program. This alerts the customer that the order is accepted or denied and that the order is processed for delivery. The credit card processor then passes on what is known as a “settlement request,” or request for funds to be deposited into the merchant’s bank account. The Internet merchant account gathers the funds for a certain amount of time, such as 24 hours, and then transfers monies to the merchant’s bank account, minus any fees it charges. This completes the process.

Typically, a merchant account is an account that is established between a merchant bank and a retail business. In this arrangement, the retailer can accept credit card orders from its customers through an account it has set up with the bank.

The monies for purchases are received through the bank and then transferred to the merchant or retailer, minus fees the bank charges for the account and for processing the payments.

Anyone who wants to accept credit cards over the Internet will need their own online merchant account. This type of account is a little bit more difficult to get then a “regular” merchant account is, because credit cards used this way are never actually exchanged so that the merchant can see the credit card and therefore, the merchant never sees the actual signature of authorization.