When a customer pays by card, the details are sent securely from the merchant to a payment processor, which forwards the request to the card network and the customer’s bank. The bank approves or declines the transaction. If it is approved, the funds are later settled to the merchant’s bank account.

Card processing generally includes interchange fees set by the card networks and paid to the card-issuing bank, assessment fees charged by the networks, and the processor’s own markup. How these are packaged depends on the pricing model, such as flat-rate or interchange-plus. Ask for a clear breakdown before you sign up with any provider.

A chargeback happens when a cardholder disputes a transaction with their bank. The bank may reverse the payment while the dispute is reviewed. Clear product descriptions, good records, and responsive customer service can help reduce disputes.

The Payment Card Industry Data Security Standard (PCI DSS) is a set of security requirements for businesses that handle card data. Using a secure payment gateway can reduce how much cardholder data your own systems touch.

A payment gateway securely captures card details at checkout and passes them on. The payment processor communicates with the card networks and banks to authorize and settle the transaction. Many providers offer both services together.