These rates vary, and ISOs generally charge more than banks. Credit card processing is done by the ISO or by a separate entity with which the ISO contracts. The merchant does not usually deal directly with the processing service. The service communicates with the issuing bank to determine whether the customer's credit card account is valid, and the service sends the issuing bank a request for funds. The service provides the merchant with an electronic form that sends credit card information securely from the merchant's Web site to the processing service.
Merchants usually pay for the software and a monthly fee for the credit card processing service.
Another responsibility of the processing service is fraud prevention. One commonly used method is address verification service, by which a billing address entered online by the customer is compared to the address to which the customer's credit card number is registered. Sometimes these services cost extra. The merchant bank, or acquiring bank, accepts payment from the customer's bank and deposits the money into the merchant's account. The customer's bank, or issuing bank, approves the credit card charge and sends the money to the merchant's bank.