When a customer purchases an item with a credit card, a two step process begins. The merchant or the website requests an authorization from the customer's credit card account to ensure that the card is valid and the customer has enough available balance for the purchase. The merchandise is sent, and the merchant informs the bank where they have a merchant account. The bank deposits funds to the merchant's account while the customer's account is debited for the amount of the purchase. At that time, the customers' bank takes out the required fees and the transaction is complete.
Credit cards are an important part of enabling Internet commerce.
The easiest process to integrate into an existing business is an off-line authorization and settlement process. For more advanced web merchants who are processing more than 100 transactions per month, real time credit card authorization becomes economical. With a link to a Processing Service Provider such as Cybercash or AuthorizeNet, the website generates an authorization request when the customer places the order. If the merchant is selling hard goods which have to be shipped to the customer, then order is saved securely for later settlement. Once the goods are shipped, the merchant can settle the order, and the transaction is completed.