Online Credit Card Processing Explained


Merchant Accounts vs. Payment Gateways: What's the Difference and Which Do I Need?

See Our Merchant Processing Terms & Definiations

Accept Credit Cards Online!An Internet Payment Gateway allows merchants to process credit card orders from their website, or a web-based "Virtual Terminal", in real time. With this method, a customer knows immediately upon submitting his web order, whether or not their credit card was approved.

An ecommerce shopping cart is typically used by the customer to enter his online order. The shopping cart allows customers to select the items they want to purchase from your website. At checkout the shopping cart totals the items, adds any applicaable tax and shipping charges, and collects the customers shipping and billing information. The shopping cart then transmits the details of the transaction to the payment gateway.

The payment gateway captures the credit card transaction, encrypts the transaction information, routes it to the credit card processor and then returns either an approval or a decline notification back to the shopping cart. If approved, the cart will complete the customer's order. If declined, the cart will prompt the user to re-attempt or to enter an alternate payment method.

This is a very quick and seamless process and the customer does not directly interact with the payment gateway in any way since the data is forwarded to the gateway via your shopping cart over a secure (SSL) connection.

There are three vital activities performed by an online payment gateway when a customer attempts to make a purchase from your website using a credit card or a debit check card. These include the credit card authorization, credit card settlement, and activity reporting.

  • Authorization - Any purchase made with a credit or debit card via a payment gateway must first be authorized by the credit card issuer. The payment gateway checks that the credit card is acceptable. The gateway affords you a secure link between you, your customer and your credit card processor. It also allows for fast and efficient transaction processing with an average response time of 2 seconds.

  • Settling - At the end of the day, the internet payment gateway groups all of your transactions together and sends them off to your bank in a single batch. This process passes the transaction to your bank so that you receive payment. This process is called settling. Once the funds settle, it normally takes two business days for you to see the funds electronically deposited into your bank account.

  • Reporting - This process records your transactions and allows you to view them using the payment gateway report facilities. From here you can review them, print them or download them to your computer for further processing. Some payment gateways are even compatible with Quickbooks, making accounting and reconciling a breeze.


An Internet payment gateway allows an unlimited number of users to access the gateway concurrently, which is different than a credit card processing terminal or software solution where only a sinlge customer can checkout at a time, or a single operator can enter transactions one-at-a-time. Internet payment gateway gateways afford multiple users the ability to enter transactions from numerous locations, all at the same time. Effectively, an Internet payment gateway gives you an unlimited user license fee.


Internet payment gateways also provide fraud screening tools to detect and minimize fraudulent credit card transactions. This includes address verification and card code value (CVV) verification to ensure that the payments made via your Internet payment gateway are, indeed, legitimate orders and not fraudulent. It also prevents fraud by storing the credit card transactions in the Internet payment gateway rather than on your website. This reduces your liability since you don't store any credit card information on your server.


Payment gateways also provide use of a virtual terminal, where a merchant can manually enter credit card transactions that are received via methods other than a website. This is extremely useful for entering in orders you may take over the phone or through the mail.

Also, many Internet payment gateways offer a secure (SSL) checkout page so the merchant doesn't need to outlay the costs of their own secure certificate.

A good Internet payment gateway also provides 24x7 customer support so you can get assistance from with someone with experience when needed.


When looking to find an Internet payment gateway, there are some other important considerations. These include servers that are located in secure PCI compliant data centers with an uptime of about 99.9 percent and a support team that can get the servers back online 24 hours a day, 7 days a week. Anything less is unacceptable, especially for a web-based business.

Ease of use is another critical factor. The payment gateway should be easy to integrate with your site through the help of technical support and your webmaster.

Scalability is another important concern. If a Gateway provider can't grow with your business, you can run into future problems. Because of this, it's important to verify that your gateway provider's server can handle significant growth.

Finally, you should ensure that the gateway provider you choose offers all the features you need, which may include options such as Quickbooks integration, recurring billing, transaction upload and download, and more.

Want to know more? See our Payment Gateway Feature Comparison and find out why CyoGate beats the competition hands down!

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Retail & Internet Merchant Accounts

An Internet Merchant Account is sometimes referred to as a "MOTO" (Mail Order & Telephone Order) Account because they all require the ability to process a credit card payment when there is no physical credit card present to be swiped. A standard retail "swipe" merchant account does not allow processing of these "card-not-present" transactions.

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High Risk Merchant Accounts

If the domestic banks are denying your merchant application because they believe your industry is considered high risk, CyoGate can help! We have an offshore network of merchant processing partners that enable us to provide low cost, high risk merchant solutions to a much wider range of businesses and industries.

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Internet Payment Gateway

The CyoGate Internet Payment Gateway offers one of the quickest and most cost effective ways to accept and process credit card and electronic check payments online. Our payment gateway works with most existing merchant accounts and supports hundreds of popular web shopping carts and eCommerce platforms.

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