Terminology
There are four entities involved in Internet credit card processing using the PaymentNet service. There are actually other parties involved, but for the purposes of this discussion we will limit it to the following four:

• The merchant accepts credit cards as a method for payment for goods or services on the merchant’s web site.

• The acquiring bank provides the merchant with an Internet Merchant Account to enable the merchant to accept credit cards.

• The acquiring processor provides credit card processing, billing, reporting and settlement and operational services for acquiring banks. Some acquiring institutions provide their own processing services while many others contract this service through a third-party corporation like First Data Corporation.

• The PaymentNet transaction processing service provides a secure link between the merchant’s web site and the acquiring processor for transmitting encrypted credit card information and authorization results.

The PaymentNet Authorization Process
There are several steps to the credit card authorization process that are managed by PaymentNet

1. Your web store application collects a consumer’s credit card information in a secure environment and passes the information to  the PaymentNet client (and eventually the PaymentNet server). The PaymentNet service transmits the credit card information to the acquiring processor over a private line. The processor verifies the availability of funds and "authorizes" the purchase. The cardholder's available credit limit ("open to buy") is reduced by the authorized amount.
   
   
2. The PaymentNet service passes the authorization results (approve/deny) with the authorization code back to your web store to inform the consumer of the authorization results, enabling the transaction to be completed.
   
   
3. If you are shipping the product immediately, PaymentNet will convert the authorization into a billable transaction by "capturing" the funds. This is usually done once a day in an accumulation of transactions known as a "batch" (this is processor dependent as to the time of day when the capture occurs.)
   
   
4. Once the funds have been captured, the transaction can be "settled," a process in which the credit card issuing bank is notified by the processor to transfer funds to your acquiring bank. The exact time of day when settlement happens will vary, based on the credit card issuing bank.

PaymentNet Settlement Options
According to Visa/MasterCard regulations, funds cannot be "captured" until a merchant has shipped the ordered product. To accommodate the different operational requirements of merchants, you will be provided with the ability to select how you want to manage settlement of your transactions: Automatic Settlement or Delayed Settlement.

Automatic Settlement.

If you provide immediate product or service fulfillment on your site (for example, subscriptions or software downloads,) you will want to register for Automatic Settlement. This allows your orders to be authorized and captured for settlement in a single step as part of the order process. Depending on the acquiring processor, your authorized transactions will be automatically submitted for capture and settlement usually once a day.

Delayed Settlement.

Delayed settlement allows you to authorize a transaction immediately and capture the funds at a later date. Delayed settlement is recommended if you do not provide immediate product fulfillment.

Transaction Reporting
As part of your service, PaymentNet provides a transaction reporting site. This site is updated daily and will provide you information on all transaction activity from your Web site. This site is password-protected to ensure your privacy.

Next step?