Your Get-Started Guide to Online Credit Card Processing

Are you looking to accept credit cards through your ecommerce site? You’re in luck – we’ve got everything you need to help make the best decision for an online merchant account.


Looking to accept payments through your online store?

Good for you – doing so is a surefire way to take your business up a notch. Not only does directly accepting payments boost your credibility, it also boosts the chances of turning casual shoppers into paying customers.

And while you may already understand why you should use online credit card processing, you might be unsure of the following: How much will it cost? Should you use a merchant account or try something like PayPal? What’s involved in the application process?

That’s what this guide is all about – giving you the valuable details needed to confidently choose the best online merchant account. So get ready to roll, because we’ll be covering a lot of information that will help shape how you accept payments online. Whether you read the entire guide, or are just looking to reference specific sections, feel free to print this out, bookmark it and/or share with your social networks.

After reading this guide, you’ll be able to answer the following questions:

Let’s get started, shall we?


What is online credit card processing and why is it important?

In its simplest form, online credit card processing is the method in which you accept customer payments, via debit/credit cards (such as Visa, MasterCard, Discover and American Express), directly through your online store. Just as you swipe your card when making a payment at your local gas station, online shoppers must also “swipe” when purchasing through an ecommerce site. Of course, the main difference is that there isn’t a physical terminal to facilitate the transaction, which is where online processing comes into play.

In a larger sense, online credit card processing (often referred to as a having a merchant account) is the process in which payment transactions take place over the internet. This chain of events requires a payment gateway and payment processor to help move and share information across the web to ensure that you, the business owner, quickly and correctly receive customer payments. While the transaction itself takes only a few seconds, there’s a lot of behind-the-scenes work that comes into play, of which we’ll later discuss.

Beyond knowing what payment processing is, you should also understand why it’s so important to your online business. For a brief overview of its impact, consider the following benefits:

Now that you have a better understanding of the basics of online credit card processing and why it’s so important to the success of your ecommerce business, let’s answer the common question about why you should choose a merchant account over other options, such as PayPal.


Why should I use an online merchant account instead of something like PayPal?

If you’re like most people, the beginning of your search to accept online payments starts with the following question: should I use PayPal or get a merchant account? And while several businesses opt to use PayPal or Google Wallet because of its convenience and quick setup, there are some key drawbacks to using a service like this.

To help guide your decision, take a look at the following advantages of using an online merchant account:

More than anything, only using PayPal to accept payment greatly hinders customers’ perception of your business and brand. If you’re not accepting credit cards directly through your site, it dampens the credibility of your entire ecommerce operation, leaving shoppers to wonder if your site is truly legitimate. In other words, accepting credit cards helps make your online business seem bigger than it really is – and in a world that’s filled with competing sites, perception is everything.

At this point, you should have a good understanding of what online credit card processing is, and the pros and cons of pursuing this option in light of using PayPal. Now it’s time for us to take a glimpse into the behind-the-scenes action of online payment processing, that way you know exactly what happens and what tools you need to facilitate that process.


How does the actual process of accepting online payments work, anyway?

The average credit card transaction takes just a few seconds to complete online, which is particularly impressive considering all the action that takes place behind the scenes. Between the buyer entering his/her credit card information and the elaborate communication process between various financial institutions, there’s a lot going on. And while it may seem like a lot of information to take in, having a decent understanding of this process is particularly helpful as you begin to accept online payments of your own.

In a nutshell, once a customer submits their credit card information, that data is securely moved across the internet to ensure that sufficient funds are available, and then the funds are moved from the customer’s bank account to yours.

Check out the full process, step by step:

  1. Your customer enters and submits his/her credit card information when placing an order through your online store.
  2. That information is encrypted (turned into a bunch of characters and symbols) and securely carried through your integrated gateway to your credit card processing company.
  3. Your credit card processor then submits this transaction data to the credit card network, such as Visa or MasterCard.
  4. The credit card network then forwards that information to your customer’s bank, which checks to see if your customer has adequate funds to pay for the order. If yes, the transaction is approved. If not, it’s declined.
  5. Your customer’s bank then sends the approved/declined status back to the credit card processor, which then reports that information back to your credit card processing company, and then sends that information back to you, the merchant.
  6. Once you receive the “Authorized” (approved) message, you fulfill the order to your customer.
  7. Your customer’s bank then sends the funds to the credit card network (Visa, MasterCard, etc.), who then passes the money to your bank. From there, the bank deposits your funds directly into the account that you’ve indicated on your initial application.

To sum it up, the process is designed for credit card information to flow in one direction and back the other, with the first step being a customer entering their credit card on your website, the middle steps including fund verification and collection, and the last step resulting in funds being deposited into your account.


All right, now that you know the basics, let’s dive into what you really want to know: how much online credit card processing costs.


What fees are associated with online credit card processing, and how much should they cost?

The old saying, “there’s no such thing as a free lunch” definitely applies to online merchant accounts. The good news, however, is that credit card processing will end up paying for several of your lunches, so the investment pays off in the end. Naturally, one of the most important factors for anyone looking for an ecommerce credit card processor is cost, and there’s definitely some variety between providers.

When you’re comparing options, there are two general categories of fees you should be aware of:

Standard online credit card processing fees
No matter your provider, you’ll see these charges each month:

Ancillary online credit card processing fees
Depending on your provider, you may see or experience these fees in different ways:


I know you’re probably thinking that credit card processing has a lot fees. But keep in mind that accepting online payments is a complex process. And because credit card theft is more prevalent online than in physical stores, transaction rates and other fees are a bit higher to ensure security for you and your business.

On that note, remember that price shouldn’t be the determining factor. So if you find a merchant account provider that offers rates far below the industry standard, make sure there aren’t any hidden fees involved. In other words, you often get what you pay for. At the end of the day, you need to find a provider that’s both affordable and sustainable enough to power your business growth.

Okay, that’s enough of a math lesson. Let’s talk about what you need to know regarding the actual application process. The good news? It’s a lot easier than you think.


What can I expect when applying for an online merchant account?

Applying for an online merchant account may seem intimidating at first, especially if it’s your first time submitting an application of this kind. Fortunately, there’s no need to worry, as the process is quick and painless. Because of the increasing number of businesses moving online and the increased competition among payment processing companies, the application process has been streamlined to help you get set up faster.

The main thing to know is that there isn’t a true industry standard when it comes to applying for a merchant account, as each company has a slightly different procedure for receiving and processing applications. Most reputable companies, however, require only the basic information, and more importantly, can turn around your application in a matter of days, not weeks.

In general, most providers will require this information at some point during the application process. Please note that you won’t need all of these items to get started, so don’t let any of this hold you back from filling out the initial application and contacting someone from your desired provider.

Once you have this information complete and any necessary contracts signed, your merchant provider will then forward that information to another entity, known as an underwriter, to review the accuracy of your materials, along with any pertinent credit history.

Note: Worried about your potential credit history? Don’t be. Your provider is there to help ensure that you can accept payments, regardless of any past credit mishaps. The most important thing is that you provide as much information to your provider as possible so they can help facilitate the process.

After you’re approved for your merchant account, the pertinent information will then be available to finish the setup process on your site. Many merchant providers take care of this for you, so ask ahead of time. From there, you’ll want to run a few test transactions to ensure that everything works properly, and just like that, you’re ready to start accepting and receiving credit card payments directly from your ecommerce site.

That wasn’t too bad, was it? Now that you’re set to breeze through your application, let’s use our final moments to talk about key things to look for when selecting and comparing potential online credit card processors.


What should I look for when choosing an online merchant account?

If you’ve conducted even one Google search for “online credit card processing,” you’ve likely noticed that there are hundreds, even thousands, of options available. With this many choices, it’s hard to sift through the clutter and figure out exactly what you should be looking for. The good news is that, no matter what you’re selling, there are some key guidelines to help you narrow things down and select the right provider.

Keep this pointers in mind to guide your search:

As you start your journey into the realm of online credit card processing, keep these pointers in mind – not only will they save you time and money, they’ll also help you sleep better at night!



Choosing a credit card processor for your ecommerce site is a foundational element of your short-term and long-term success. After all, accepting payments is what keeps the lights on, so don’t take the process of getting paid lightly.

In other words, instead of picking the first provider you find in a Google search, talk to your ecommerce provider and do the diligent research to find the right online card processor for your needs. Don’t forget to ask the key questions: How much does it cost? What kind of support do I get? How does this decision affect my daily operations?

While this process may seem like a lot of work, I promise you that it’s not near as complicated as it seems. The idea here is to ensure that you have the information needed to make an empowered decision that serves you and your online business from day one and beyond.

We wish you the very best when it comes to finding and selecting the perfect provider for your online credit card processing. If you have any questions, our team of experts is here to help. Simply visit our credit card processing page or give us a call.


And if you liked this guide, please share it with your social networks – I hope you found it helpful!


Happy selling!
-Matt Winn, Volusion

Matt Winn

Matt Winn was Volusion’s Senior Brand Manager, where he helped oversee branding and communications efforts. Matt has created hundreds of articles, videos and seminars on all things ecommerce.