system
Given the following post, respond as if you're commenting on Reddit:
human
ELI5: After entering my credit card info on a website like Amazon and pressing the "checkout" button, what exactly happens? What is the process of my credit card getting charged?
gpt
Purchasing online is slightly different than in store. In stores, the majority of the time you're purchasing for goods then and there, so you're mostly charged immediately.

Online, that is different. You're paying for goods that you will receive in the future. What happens with your card depends on how the online merchant is set up:

1) Settle on Order. This means, that like in store, you're being charged there and then for the goods. This means that you're effectively lending the vendor your money until you receive your goods.

2) Settle on Dispatch. This means that your card will only be charged once the goods are dispatched. This is usually a number of days after you click the Pay button. How they they know the money is there to take? Pre-Auths: this effectively ring-fences the money, meaning that whilst is stays in your account, once the merchant ships the item, they know the money can be taken. If they ship too late and the pre-auth expires (these usually last between 7 and 14 days), there's a chance you'll get your items for free and the vendor will lose money. Pre-auths sometimes appear on your statements as if the money has actually been taken, so it's hard to know if it's there or not.

Most websites, and indeed stores, use both payment gateways and acquiring banks:

Payment Gateway: this is what the website integrates into that facilitates pre-auths, settling and refunding. The Payment Gateway talks to the acquiring banks on behalf of the vendor, and means they only have the integrate into one thing, rather than many acquiring banks. The PG also has fraud checking abilities and rules that can be defined by the vendor.

Acquiring Bank: Effectively your bank and the vendor's bank. The Payment Gateway does most of the heavy-lifting for these.

The flow for online purchases will usually go something like this:

User purchases an item > Payment Gateway reforms fraud check > Payment gateway checks for available funds > Funds are taken or funds are pre-authed > Funds are transferred to the vendor's acquiring bank.