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Rhinestone Biz: Online Merchant Process

The online credit card purchase process can work in several ways. One method is similar to that of an ATM transaction where the funds are withdrawn from the customers’ bank and routed to the merchant at the same time (relatively speaking). This is called the ‘capture’ method.

Another method has an intermediate step where the customers’ funds are held in reserve during order processing, since the customer is typically not standing at a retail counter with a complete transaction ready to go. The period of time that the funds are held in reserve are used to make any modifications to the original purchase and serve as a kind of grace period. This is called the ‘auth/capture’ method and is used by Rhinestone Biz. Here are the steps in the ‘auth/capture’ method:

  1. Rhinestone Biz submits a credit card transaction to its payment gateway on your behalf via secure connection from (Your credit card digits, expiration and security code are never kept at Rhinestone Biz.)
  2. Our payment gateway receives the secure transaction information and passes it via a secure connection to a merchant bank processor.
  3. The merchant bank processor submits the transaction to the ‘credit card interchange’ (a network of financial entities that communicate to manage the processing, clearing, and settlement of credit card transactions).
  4. The credit card interchange routes the transaction to your card issuer.
  5. The credit card issuer approves or declines the transaction based on your available funds and passes the transaction results back to Rhinestone Biz. If approved, the funds are held in a ‘reserved’ state by the card issuer. This is the 'authorization' part of the 'auth/capture' method.
  6. At this point Rhinestone Biz processes your order and may make changes (by lowering the authorized amount) if there are any back order situations or is items have been discounted.
  7. When your order is ready to ship, Rhinestone Biz completes the card transaction by ‘capturing’ the reserved funds. At this point, the payment gateway is notified of the request to complete the pending transaction.
  8. The merchant bank processor notifies the credit card interchange of the request.
  9. Your bank credits your account and releases the funds which make their way back to the Rhinestone Biz merchant bank via the merchant bank processor and the merchant bank.