The Payment Gateway
When the customer completes the shopping cart checkout, they are forwarded to a Payment Gateway. The Payment Gateway requests the customer's card details and communicates with the acquiring bank to authorise the transaction. This means that it fits between your Shopping Cart and your Internet Merchant Account.
It is up to the Shopping Cart to calculate the total amount. When the transaction is either complete or is cancelled, the customer is returned to either a 'Success' or 'Cancelled' page or script on your website. Data is posted back to these pages so that you can update your database - if you are using one - with the results of the transaction. If you are using a third party shopping cart, then the 'Success' and 'Cancelled' messages are likely to be pages within the cart.
When a customer attempts to pay using their card, a sends a message to the aquiring bank to obtain authorisation for the card payment. The bank will perform it's own security checks and balance checks to determine if the payment should be authorised.
There are two extra security checks which the acquiring bank can make at your request. These are AVS and CV2.
AVS - Address Verification Service - To use AVS, the customer's address is required. The acquiring bank then checks the customers address posted against the address which is held in it's own database to make sure the two match before authorising the transaction. However, it does not actually match the whole address, instead it takes the numbers in the posted address and matches them against the numbers in the address in their database. Usually this will be a house number and also any numbers in the postal code. If the customer enters the number of their house using words instead of numbers, the AVS check will fail and the payment will be declined. Likewise if the customer enters a house name and omits the number, the payment will also be declined.
CV2 - Card Verification checking - This requires that the customer enter the last 3 digits of the number which appears on the signature strip of the card. This is useful as an additional check, however card fraudsters who have obtained card numbers may have also obtained the CV2 number so this method does not guarantee that the person attempting the transaction is in possession of the actual card.
Examples of Payment Gateways are RomanPay, NoChex, Protx, etc. These will offer a service for a fixed monthly fee of £15 - £20 per month with a number of transactions, typically 100 included, with additional monthly transactions charged at 10p - 15p each.
PayPal and Google Checkout are worth considering. Google Checkout (1.5% of order value + 15p per order) is dealt with separately.
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