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Merchant accounts allow businesses to accept credit card and debit card payments. Most credit and/or debit card payments today are sent electronically to merchant processing banks for authorization and payment. There are different methods for presenting a credit card into the banking system. The most commonly used system today is where the entire magnetic strip (on the card) is read by swiping the card through a terminal. Sometimes the information is manually entered into the reader/terminal, computer or website. Early methods used a paper form with a carbon copy where the information (sale) was written by hand. A manual device was then used for mechanically imprinting the embossed card number onto the forms. This information was sent to the bank and the carbon copy given to the customer.

When a credit card is processed, it is verified and authorized and temporarily stored in the machine (terminal/reader.) The terminal uploads the electronic funds directly into the merchant’s bank, or a polling service provider will dial in to collect, process then submit the funds to the bank. An Automated Response Unit allows manually keyed entries of a credit card over a mobile phone or land-line phone. This is used with the manual method of a merchant imprinting the customer’s card with an imprinter-type machine and creating a merchant copy and carbon copy for the customer. The transaction is also processed instantaneously over the phone with this method. A “payment gateway” is an e-commerce service that authorizes payments for online businesses and online retailers. It works the same way as a point-of-sale terminal located in retail stores.


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