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You sign in to the payment provider account you already have from Settings, Payments, so you need no new merchant account.
What happens in a card payment
A card payment is four steps, not one. The buyer sees a single click; the money takes days to reach you. Three parties sit between you and the buyer: the buyer's bank (the issuer), the card network, and the bank or provider that takes card payments for you (the acquirer).
| Step | What happens | When |
|---|---|---|
| 1. Authorization | The gateway sends the card details and the amount. The buyer's bank checks the card, the funds and its fraud rules, may ask the buyer to confirm in a banking app, then approves and holds the amount, or declines. | Seconds, at checkout |
| 2. Capture | Your store asks to collect the amount that was approved. Until then, the money is held on the buyer's card but not taken. | At once, or later (when you ship) |
| 3. Clearing and settlement | The card network passes the captured payment from the buyer's bank to your acquirer, and the money moves between the banks. | Within a few business days of capture |
| 4. Payout | Your provider pays your balance into your bank account, less its fees, refunds, chargebacks and any reserve. | On the schedule your provider sets |
An approved authorization is a promise, not money. The order is paid when the capture settles, and the money is yours to spend when the payout lands.
Gateway, processor, merchant account and payment service provider
These four words overlap, and providers and tools use them loosely. A company that calls itself a gateway may do all four jobs; a page that says "processor" may mean the gateway. Read them as jobs, not as company types:
| Word | The job it usually names |
|---|---|
| Payment gateway | Takes the payment details at checkout, encrypts them, sends the request and returns approved or declined to your store. |
| Payment processor | Carries the authorization and settlement messages between the card networks and the banks. |
| Merchant account | An account with an acquiring bank that lets a business take card payments. Settled money arrives here before it is paid out. |
| Payment service provider (PSP) | One company that bundles the gateway, the processing and the account, often by holding many merchants under its own merchant account. |
When you compare providers, skip the labels and ask four questions: who approves your account, who holds your money before payout, who sets your fees, and who handles disputes.
What a card payment costs
A common fee structure is a percentage of the payment plus a fixed amount per payment. The figures below are an example, a fee of, say, 3% plus $0.30, not any provider's price:
| Order total | Percentage part (3%) | Fixed part | Total fee | Fee as a share of the order | You receive |
|---|---|---|---|---|---|
| $10 | $0.30 | $0.30 | $0.60 | 6.0% | $9.40 |
| $40 | $1.20 | $0.30 | $1.50 | 3.75% | $38.50 |
| $100 | $3.00 | $0.30 | $3.30 | 3.3% | $96.70 |
The fixed part weighs more on a small order: the same $0.30 is 3% of a $10 order and 0.3% of a $100 order. That is one reason a higher average order value lowers what you pay per dollar sold.
Measure the fee against profit, not only against price. A $40 order at a 40% gross margin leaves $16 of gross profit. A $1.50 fee takes $1.50 ÷ $16 = 9.4% of that profit, though it is only 3.75% of the price.
Check what your agreement adds on top of the base rate. Separate charges can apply to cards from another country, to currency conversion, to a chargeback, and to a refund, where some providers keep the original fee. Some providers charge one flat rate for every card; others pass on the card network's cost for each card type and add their own margin, so the fee changes from card to card. The fee is usually charged on the whole amount the buyer pays, including shipping and tax.
Authorization and capture when you ship later
You can capture at checkout, or authorize at checkout and capture when the order ships. Capturing later means you never take money for an item you cannot send: if a $40 item sells out, you cancel the authorization, the hold is released, and there is nothing to refund.
The cost is time. An authorization lasts a limited number of days, set by the card networks and your provider, and the window differs by card type. If you capture after it has expired, the capture can fail and you have to charge the buyer again, which they may refuse. Check the window in your provider's documentation before you sell pre-orders or made-to-order goods on delayed capture.
Split shipments need care. If you ship $25 of a $40 order now and $15 later, you need either a provider that allows more than one capture on one authorization, or a capture of $25 now and a new charge for the $15.
Declines and retries
The buyer's bank decides whether to approve, not the gateway. Common reasons for a decline:
- Not enough funds or credit on the card.
- Wrong details: card number, expiry date, security code or billing address.
- Fraud rules at the buyer's bank, often set off by an unusual amount, place or time.
- A failed confirmation, when the bank asks the buyer to approve in a banking app and they do not.
- An expired, blocked or reported card.
The reason that comes back is often a generic code such as "do not honor", so your provider may not know the real cause either. Tell the buyer plainly that the payment did not go through, and offer to try again or pay another way. A declined payment at checkout is a lost order unless the buyer stays, so declines show up in your conversion rate and your abandoned carts.
Do not retry the same card over and over. A decline for a stolen or closed card will not change, card networks can charge for repeated retries of a declined card, and a run of declines can trip your provider's fraud checks. For a recurring charge, retry a soft decline such as low funds a few days later, and ask the buyer to update the card after that.
Card security and payouts
Let your payment provider handle the card data. When the card number is entered on a page or in a field the provider hosts, it goes straight to the provider and never sits on your server or in your order records. The standard for anyone who stores, processes or sends card data is PCI DSS (Payment Card Industry Data Security Standard). What it asks of you depends on how you take payments, so ask your provider which part applies to your store. Never take card numbers by email, chat or a note on an order.
Payouts follow settlement. Your provider pays out on a schedule, such as daily or weekly, after a delay that can be longer for a new account. A provider can also hold a reserve: part of your sales kept back to cover refunds and chargebacks, often for a new business, pre-orders or a product with many disputes. With a reserve of, say, 10% of each day's sales held for, say, 90 days, a store selling a steady $10,000 a month has about $1,000 × 3 = $3,000 held at any time once the first 90 days have passed. Plan your cash for that.
In Tanqory, each order shows how it was paid and whether the money is in, and you connect your own provider account under Settings, Payments.
Questions
Do I need a payment gateway and a merchant account?
You need both jobs done, but not always by two companies. A payment service provider can give you the gateway, the processing and the account in one agreement. A separate merchant account from a bank is an option for a business that wants its own terms, and it still needs a gateway to connect to your checkout.
How long until a card payment reaches my bank?
It takes the time to settle plus your provider's payout schedule, usually a few business days in total. A new account, a reserve or a payment flagged for review can make it longer. Your provider's dashboard shows the expected date for each payout.
Why was a payment declined when the card works elsewhere?
The buyer's bank makes the decision, often from fraud rules that look at the amount, the place and the store. A first purchase from a new store can set them off when the buyer's everyday payments do not. The buyer can call the bank to approve the payment, or pay another way.
Is the payment fee charged on shipping and tax?
Usually yes. The fee is charged on the whole amount the buyer pays, and that includes shipping and any tax you collect. On a $40 order plus $5 shipping, a fee of, say, 3% plus $0.30 is $1.35 + $0.30 = $1.65.
Do I get the fee back when I refund an order?
It depends on your provider's terms. Some return the percentage part, some return none of the fee, and some charge a separate refund fee. If you use delayed capture and cancel before capture, no payment was taken, so there is nothing to refund.