For a business to accept credit or debit card payments from customers online, the process involves a lot of different people and steps. Before we go into more detail about these, let’s quickly define a few key terms:
- A merchant account is a type of bank account that a business needs to have in order to accept payments from customers using credit or debit cards. (This guide will tell you more about merchant accounts.)
- Issuer, also known as issuing bank, is a financial institution that gives its customers credit or debit cards. Think of it as the customer’s bank for the purposes of this guide.
- Card association (also called “card network”) is a group of financial institutions that work together to process card payments based on a set of rules that everyone agrees on. Visa and Mastercard are two big ones.
- A financial institution that processes a transaction based on information from the card issuer and card association is called an acquirer, acquiring bank, or merchant bank. They set up merchant accounts for businesses and are members of card associations.
- Payment processor is a term that is often used in different ways. In this guide, a payment processor is the part of an acquirer that sends information about a transaction to the appropriate card association. (This guide has more to say about payment processors.)
- Payment gateway is software that makes it easy for a merchant’s website to send a customer’s card information to a payment processor. (Find out what payment gateways are.)
