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Here, I explain the six-step process of how e-commerce works—from your website to your bank account.

This is how electronic commerce works:

  1. The website provides the visual design for the store and shopping cart.
  2. The shopping cart handles the products, customer data, and receipts.
  3. The shopping cart sends the credit card info to a gateway for validation.
  4. The gateway checks to see if the credit card is valid and accepts the money.
  5. The gateway sends the money to your merchant account.
  6. The merchant account sends the money to your business account.

The difference between a merchant account and a business account

The merchant account is an account set up to receive credit cards transactions. The business account is simply an account to place the authorized funds. The gateway validates the card and transfers the funds to the merchant account. The top gateway services are as follows:

  • PayPal
  • Stripe
  • CyberSource
  • Realex
  • Sage Gateway
  • Plug in Pay
  • PSiGate
  • eWAY

PayPal is a shopping cart, a gateway, and a merchant account (and can be used as a business account) all combined into one. I always recommend PayPal, and I’ve been a customer since 2004.

However, PayPal isn’t the best solution for everyone, but it’s one of the easiest tools to start sending and receiving money online.

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Published: updated on 07/03/2017.
About Neal Chester

Neal Chester is a web designer, teacher, writer, and marketing consultant. He places emphasis on user experience and conversions. Visit his website and connect with him on Linkedin.