Who are the key players in payment processing? 

There are four key players involved in every payment transaction.


The person or entity buying the goods or service.


The business (you!) selling the goods or service.


The bank or financial institution where you have your merchant bank account.


The bank or financial institution that provides the customer's payment card and account.

Plus: The payment gateway

The payment gateway (such as Authorize.net) sits in the middle. It connects all the key players and, most importantly, allows the merchant to process and accept payments.

How do payments get processed?

There are three steps in the payment process.

Step 1. Authorization

When your customer clicks the 'Buy' button on your eCommerce website or pays at your POS terminal, the payment gateway manages the process of checking they have enough funds to pay for the goods or service.

The gateway:

  • Automatically receives the necessary transaction details and the customer’s payment information from the merchant
  • Makes sure your customer has sufficient funds in their account

Step 2. Capture

After verifying that funds are available, the issuer either approves or declines the transaction and places a hold on the funds. At this point, the merchant can hand over or ship the goods, or deliver the service.

Step 3. Settlement

This is the process of transferring the funds from the customer's bank or financial institution relevant account to your merchant account. This typically takes a couple of days.

Settlement generally happens once a day when the payment gateway collects up all of the merchant's transactions for the day and sends them to the payment network. This is where banks connect to each other so that issuers can transfer funds from customers' accounts to the merchant's bank account. To complete each transaction, the issuer posts the charge on customer's account.

Payment processing in three steps

Watch the video to learn about the three steps in the credit card processing cycle. 

What is a payment gateway?

For a business like yours that wants to accept payments—online, in person or both—a payment gateway (such as Authorize.net) is a must-have, along with a merchant bank account. 

A payment gateway lets your business accept payments made via your eCommerce website or mobile app, or at instore or mobile POS terminals.

Payment methods you can accept include:

  • Credit and debit cards
  • eChecks
  • Digital wallets

The payment gateway processes the payment transactions and enables the money to move from your customers' accounts into your merchant bank account. 

What is a merchant bank account?

For your business to get paid, you need a merchant bank account. It's a special kind of bank account that allows you to accept made by payment cards, eChecks and digital wallets from websites, POS terminals, and mobile devices.

The bank where you have your merchant account is called the acquirer, or merchant acquiring bank. Authorize.net can help you set you up both a merchant account and a payment gateway in our all-in-one pricing option. 

When you apply for a merchant account, the acquirer's underwriter take a number of factors into account, including:

  • Your industry
  • Your payment processing history (if you have one) 
  • The creditworthiness of your business
  • Your personal credit history

Once your merchant bank account is approved, your business is ready to connect to a payment gateway and start accepting payments. 

What to look for in a payment gateway

As a merchant, you get to choose your payment gateway. There are a number of things to consider when making your choice. For example:

  • What types of payment does the gateway help you accept?
  • Does the gateway come with fraud protection capabilities?
  • Is it easy to add Buy Now or Donate buttons to your website (perfect for businesses that sell items singly or non-profits that accept donations)?
  • Does the gateway simplify acceptance of recurring payments (important if your business runs on a subscription or installment model)?

Authorize.net can provide you with a payment gateway, or with a gateway plus a merchant bank account as an all-in-one plan.

As standard, all our plans come with:

Multiple payment types

Making it easy for customers to use their preferred payment methods, including credit cards, debit cards and digital wallets.

Advanced Fraud Detection Suite

Advanced Fraud Detection Suite can protect your business by helping to identify, manage and prevent suspicious and potentially fraudulent payment transactions.1

Customer Information Manager (CIM)

Customer Information Manager (CIM) streamlines checkout for returning customers by enabling them to buy without re-entering their payment details.1

Automated Recurring Billing

Automated Recurring Billing allows you to accept and submit monthly recurring or installment payments.

Simple Checkout

Simple Checkout lets you easily add a Buy Now or Donate button to your website.

Digital Invoicing

Digital Invoicing saves time by enabling you to issue digital rather than paper invoices.

You can add these options to your plan:

eCheck® payments

Accept and process electronic check payments.

Account Updater

Account Updater helps avoid payment interruptions and lost sales by automatically updating credit card data in CIM profiles and automated recurring billing subscriptions.

Customer stories

Learn how businesses benefit from partnering with us.

Dollar for Portland

Dollar For Portland makes subscriptions easy with Account Updater.

Prism Kites

Prism Kites grew their business online by accepting payments with Authorize.net.

Amy's Gourmet Apples

Discover how Amy's Gourmet Apples reaches more customers online.

1 May be subject to charge in the future

An ally you can trust

Choosing the right allies to provide your payment gateway and merchant bank account will be critical decisions as you build your business. The good news is, you're not alone. Authorize.net is here to help you navigate your payment gateway and merchant bank account decisions, recommend further solutions, and provide you with whatever additional expertise and answers you need.