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Merchant Accounts and Gateways and Shopping Carts! Oh My!

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Many of my clients that I talk to are wanting to have some sort of e-commerce ability for their business. This growing trend has led to many different companies all offering their services with multiple offers, deals and features. One of the biggest sources of confusion for many of my clients using QuickBooks is how everything fits together with their software, shopping cart, and merchant service provider.

A Merchant Service Provider is the company responsible for actually processing the card and funding the merchant. When you charge a card, the information gets sent to the card association (Visa/MasterCard/Discover), which then in turns contacts the customer’s bank to determine if the funds are available. If they are available the card association will put a hold on the funds and pass an Authorization back to the merchant service provider, which then sends the information back to the merchant. At the end of the day, the merchant will settle their charges. The Merchant Service Provider will then request that the authorized funds get deposited into the merchant’s bank account.

A Shopping Cart is the software that allows users to browse your website, select items into a ‘virtual’ cart, and process the checkout of a customer which includes getting the payment information. Because there are so many different merchant service providers out there, it is hard for a shopping cart software to support them all, so what they usually end up doing is to use a Payment Gateway. The payment gateway is responsible for sending and retrieving encrypted credit card information between a shopping cart and a merchant service provider. They are a like a bridge between the two. One of the most common gateway companies is Authorize.net. Because they are one of the most popular, most Shopping Carts support them, as well as most Merchant Service Providers. Sometime, the Merchant Service will have a partnership with Authorize.net so it is hidden in the background, but usually, you will need to setup with your merchant service as well as Authorize.net to get everything working for your website.

Below is a basic diagram of the process flow for credit cards using e-commerce.

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