How Credit Card Transactions Work
When a payment is submitted through your site, the site asks your gateway if this payment can be accepted. Common reasons that a payment might not be accepted are: address submitted doesn't match address for credit card or the CVV code does not match the one of the card. If this payment is declined, a message is returned to the site stating why if possible. If this payment is approved, the gateway sends the payment information to your processor. Your processor interacts with your bank account and submits your funds.
In Short: Your gateway is your gatekeeper and your processor is your book keeper.
- Site to Gateway: Can we approve this?
- Gateway to Site: Let me check.
- Follow-up Option 1: Yes, I'll tell the processor.
- Follow-up Option 2: No, tell them this reason.
- Gateway to Processor: This payment is good. Go ahead and deposit it.
- Processor to Gateway: Great! I'll work with the banks to move the money from their account to ours.