Here's what happens behind the scenes when someone buys something with a credit card:
- During checkout, the merchant makes sure the customer's credit limit is enough to make the purchase. This is called authorization.
- When the items are ready to ship, the merchant asks the credit card company (Visa, Mastercard, etc.) to transfer the funds. This is called capture.
- Authorization and capture ensure for the credit card company that the items are actually available. So, if both the customer and items are present at the transaction (say, at a point of sale), then these steps can occur at the same time.
- Typically, all of a merchant's credit card transactions are processed and submitted in a batch to the credit card company at the end of a business day.
- Within two or three business days, the funds are deposited in the merchant's bank account.
Merchant Accounts and Payment Gateways
For all this to occur, every merchant needs two things:
- A merchant account, which tells the credit card company who you are and where to deposit your money.
- A payment gateway, which connects to your shopping software (Populi, in this case) and securely transmits credit card transactions.
You have two options with Populi:
Stripe serves as both merchant account and payment gateway. It takes around five minutes to set up a new Stripe account and connect it with Populi. Its pricing is better than just about anything out there—and it has no setup, monthly, or card storage fees. All things considered, we think Stripe is the best option for our customers.
An Existing Merchant Account + Authorize.net Gateway
Populi connects to Authorize.net to submit transactions; Authorize.net, in turn, connects with just about any existing merchant account out there. Authorize.net charges a number of setup, monthly, and per-transaction fees (on top of whatever fees you pay for your existing merchant account). You can start by visiting Authorize.net's website for details about their payment gateway accounts.
Important: if you decide to use Authorize.net with your existing merchant account, you only need to get a payment gateway account (they also offer merchant accounts and other services).