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The payment procedure for online business is one of the most crucial aspects which need to be addressed seriously. Credit cards and debit cards have become the most preferred method of payment for the customers. Using these cards have helped to expedite the payment process. The truth is that the businesses which depend on traditional methods of payments actually end up losing business. By traditional methods we mean the process of making hand to hand payments or paying via checks. These methods are outdated and they only slow down the entire process.

Before setting up a merchant account, the sellers need to ensure that they are aware of the payment procedure. The essence of the system can only be understood clearly by understanding the different terms which are used in the system. Let us take a look at the various terms and understand the meaning of the same.

The Glossary:

- Batch Processing: The collection of different transactions everyday is known as a batch. Batch processing therefore refers to settling or closing the entire batch at one go. The terminal or the point of sale can be set to automatic processing or manual closing. In case of manual closing, the merchant is required to create a batch for all the transactions of the entire day and once that is complete, a command is sent to the processor where all the transactions in a day are processed at a time. This allows making changes to any of the transactions. In case of automatic batch credit card processing, there is no need to at any manual commands and everything is processed at the end of the day.

- Automated Clearing House: In this method, the Automated Clearing House is linked to electronic payment from one bank account to some other bank account. Once the business debits the account, the transaction begins. However for this, the business needs to submit an ACH file which contains the account numbers, the amount of money to be debited and ABA numbers.

- Car Network: The processing networks which are used most commonly are MasterCard, Visa, Discover and American Express. These methods of payments work as a bridge from acquirer to issuer in order to authorize the transactions for credit cards.

- Issuer: An issuer is the organization which helps to issue or issues credit cards to potential holders of the cards.

- Acquirer: These are the banks which process and settle a merchant's transactions using the help of the card issuer.

- Payment Gateways: Payment Gateways are processors which are responsible for verifying account information of every customer. They are also responsible for creating funnels through which the money from the credit card of the cardholder is transferred to the merchant account of the business holder.

If someone is in the process of setting up a merchant account for his/her online business, it is very essential to understand these terms very clearly so that future problems can be eliminated.