[thelist] Explaining Payment Processing

Burhan Khalid thelist at meidomus.com
Sat Jun 25 01:45:03 CDT 2005

Maximillian Schwanekamp wrote:
> Joshua Olson wrote:
>>Hi List,
>>I'm preparing to write a document explaining the nuts and bolts of Payment
>>Processing for the typical client. 
> Great idea!  I hope you'll be posting it publicly when you're done.
>  Here's the outline that I've created to
>>guide my document.  Would anybody mind commenting on changes to it before I
>>What is Payment Processing?
>>	Defined
>>	Role in E-Commerce
>>	Other Role in Websites
>>	Key Components (Merchant Account, Gateway, Client Interface)
> Somewhere in this bunch you might have an example illustrating how the
> components work together.  A lot of people don't have a clue how the
> components interact, even after being told what they are.

This is an excellent suggestion, as I have run into similar problems 
where people just don't understand how the whole thing works.

There are some great diagrams available that show this, you might want 
to google for some inspiration.

>>What is a Merchant Account?
>>	Explanation
>>	Bank vs. 3rd Party
>>	Storefront vs. Internet Payments
> I think some common requirements for obtaining merchant account would be
> good here, a description of a "typical" merchant account and fees
> associated with it.

In addition, if you are going to make this an international thing, make 
sure you note somewhere that not all companies work with all countries, 
and international organizations have to go through some additional 
checks before their accounts are autorized.

For example, some merchant account providers require that you establish 
a business account with a participating bank, or have a business address 
where they are located.

>>What is a Gateway?
>>	Need for Gateway
>>	Key players (Authorize.net, LinkPoint, etc)
>>	Skipping a Gateway (Nova, etc)
> That list is likely to be quite long.  It's amazing how many "key
> players" there are.  This might also be a good section to address how
> merchant accounts work for non-US folk.  Also, you never actually "skip"
> the gateway; it's just that some companies offer both gateway and
> merchant account in one package (e.g. Nova with their viaKlix), whereas
> others do not.
>>Payment Processing Alternatives
>>	PayPal
>>	Print and Mail/Fax Forms
> Along with PayPal, you might include in this part ClickBank, 2Checkout
> and the like - the ones where the processing happens on the gateway's
> site rather than under-the-hood on your own.
> Like Marc, I suggest you internationalize your document, especially if
> you'll be posting this publicly.  I'm not sure where you'd put it, but
> you might want to address the issues around currency conversion and
> pros/cons of selling globally (esp for downloadable products).

Lets not forget taxing, and what about integrating shipping 
calculations?  Perhaps you could mention that most shipping providers 
have some sort of electronic gateway that allows a website to completely 
integrate calculation (and sometimes even generation of the tracking 
number) for shipments.

It would really be helpful if you would post this online somewhere if at 
all possible.

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