Payments
- How card transactions actually work, from swipe to deposit
- Authorization asks "can this card pay?". Capture commits to it. Settlement is when money actually moves, one to three days later
- Treat every control on these pages as a test. Start small, measure, then roll out
- Looking for one answer? The Quick Answer table below routes you straight there
You're either working out why a transaction failed, or where your money went. Both start here.
Quick Answer
| Looking for... | Go here |
|---|---|
| Which processor should I use? | Processor Comparison |
| How much will processing cost? | Total Cost Model |
| Why are transactions failing? | Auth Optimization |
| How does settlement work? | Settlement |
| What payment methods should I accept? | Payment Methods |
| Understanding my statement | Reading Statements |
| Am I making a costly setup mistake? | First-week checklist |
| A client missed their appointment | Check the fee, declined card or booking payment |
| AI orders appeared in Shopify | Check the channel, checkout and fees |
| I run an online store | Payments for your online store |
| A customer paid through an app for a sale or job | Check the account, payment type and notice |
Are You Card-Present or Card-Not-Present?
Not sure? If customers swipe/tap in person, you're CP. If they type their card online, you're CNP.
Pick Your Mode
- Calculate your effective rate (total fees / total volume). Compare it with your contract, card mix and average ticket. For example, Stripe at 2.9% + $0.30 costs $3.20 on a $100 domestic order: $100 x 2.9% + $0.30. That is a 3.2% effective rate. Smaller tickets raise it; added fees raise it too.
- Pull your top 5 decline codes from last month. Pick the most common one and read what it means.
- Got recurring billing? Check how many customers failed payment in the last 30 days. Are you retrying intelligently?
That's it. Dashboards and optimization can wait.
Under $50K/month: Use a simple all-in-one processor (Stripe, Square, PayPal) if it fits your business. Focus on getting paid reliably. Check published custom-pricing eligibility too; Square invites merchants above $250,000 a year to ask.
$50K-$150K/month: You've got a little leverage, not much. Work on checkout conversion first, it pays back hardest. Make sure guest checkout is smooth. Check your auth rate monthly against your own baseline. See Benchmarks for published context. Watch that your effective rate isn't creeping up. Don't touch interchange, fraud tools or orchestration yet. At this size the money's in growing revenue, not shaving payment costs.
$150K-$1M/month: your effective rate matters now. Compare it to benchmarks, ask your processor about interchange-plus, and start tracking decline codes monthly. You're big enough that they'll answer.
Over $1M/month: Negotiate interchange-plus pricing if you haven't. Consider a dedicated payment gateway vs. all-in-one. Auth optimization becomes worth the effort.
Need a second processor? Compare the sales at risk from an outage with integration, reconciliation and support costs. Your channels and backup needs decide it, not a monthly volume line. See Multi-Processor Operations.
How a Transaction Flows
From checkout to cash in your bank account.
| Phase | What Happens | Timing |
|---|---|---|
| Authorization | "Can this card pay?" - Funds reserved | 2-3 seconds |
| Capture | "Charge it now" - Transaction finalized | Same day or delayed |
| Clearing | Networks calculate who owes what | End of day |
| Settlement | Money moves between banks | T+1 to T+3 |
| Funding | Cash hits your account | T+1 to T+3 |
Deep dives: Authorization & Capture | Settlement | Money Flow
First-Week Checklist
Ten mistakes that cost real money, and every one is preventable. New to payments? Go through this list before your first live transaction. Been processing for months? Audit yourself against it.
- Your billing descriptor is recognizable. It's what appears on your customer's card statement. "WEBSERVPROD" or "SQRANDOM TEXT" instead of your business name gets you "I don't recognize this charge" disputes. Set it to the name customers know, and include a phone number if space allows. Test: would your mother recognize this on a statement? Stripe: Dashboard → Settings → Public Details → Statement Descriptor. Square sets it from your business name, so check it's correct. Shopify: Settings → Payments → Statement Descriptor. See Descriptors and Communication
- You've priced dispute alerts against your disputes. Ask your processor which alert networks are already wired into your account. Visa RDR and the Ethoca and Verifi feeds are often resold through the processor rather than bought direct. Get quotes for the networks it doesn't cover, and put the real number in the calculation before you decide. See Set Up Dispute Alerts
- You haven't bought a fraud platform too early. Below a certain volume the tool costs more than the entire problem. Start with your processor's built-ins: Stripe's Radar Lite is included with Stripe Payments, and Square's detection, CVV/AVS and velocity checks are included. Wait until confirmed fraud persists despite them. See Tool Stack by Tier
- You've calculated your true all-in cost. Budgeting only for processing fees and forgetting chargebacks, tools, reserves and labor is how a business runs out of cash. Use your processor's published rate rather than a round 3%, and check its actual dispute fee. See the Total Cost Model and Business Model Viability
- You read every processor email the same day. "Chargeback ratio monitoring", "approaching threshold", "account review", "risk department". Check your actual ratio (don't assume the email is wrong), check the warning's metric, limit and deadline, and respond to your processor within 24 hours with an action plan. See Chargeback Ratio Crisis and MATCH/TMF List
- You're on Shopify Payments, if you're on Shopify. Shopify charges a third-party gateway fee on every order you take through an outside processor, on top of whatever that processor charges. Check Settings → Payments shows "Shopify Payments", not Stripe or PayPal. See the fee by plan
- Staff use the card reader for every in-person sale. Keyed entry costs a higher rate on every processor that publishes one, carries more fraud risk, and gets no EMV liability shift. Train staff on day one: use the reader unless the customer doesn't have the physical card. Only key in for phone orders or missing cards, and monitor your keyed-in share weekly. See the keyed rates by processor
- Physical goods ship with delivery confirmation. Without delivery proof, "not received" disputes are harder to defend. Use carriers with detailed tracking, send the tracking number to the customer immediately, require a signature on high-value orders, and save the tracking data where you can find it for a dispute. For digital goods, log the download IP, timestamp and file delivered. See Digital Goods Evidence and Compelling Evidence
- You tested 3DS on a segment before turning it on everywhere. Turn it on for all transactions without measuring and you can lose approvals you only discover weeks later. Enable it for higher-risk transactions first as a live test, check auth rate after two weeks against a control group, and judge fraud and chargeback ratios only after the outcome window closes. See First-Time 3DS Setup
- You have a backup processor relationship. One account hold or termination can stop your business for days or weeks. Get approved with a second processor and route minimal volume through it. If the primary terminates, flip traffic immediately. See Processor Management and Money Held or Frozen
Five more worth checking:
- Ask for better pricing earlier than you've been told. Square's fee page says "if you process over $250,000 per year, talk to our team about custom pricing" (source, verified 2026-08-02). See Processor Contracts
- Investigate first, refund if warranted, don't reward abuse. A restrictive policy backfires, though: a customer who can't get a refund goes to their bank. See Refund Strategy and Friendly Fraud
- Don't start in a high-risk category without the systems for it. Sustained high ratios risk processor termination and a MATCH listing
- Turn on account updater for subscriptions. Ask your processor whether it's included in your plan and whether it's switched on. Get the answer from support rather than assuming it's free or assuming it's running. See Subscriptions & Recurring
- Run your unit economics before launch. See Business Model Viability
Count the ones you can't say yes to. Fix the high-cost, low-effort ones first: descriptor, alerts, Shopify setup. Then 3DS testing and a backup processor. First-time operators miss a few of these. That's normal. Learn and fix quickly, and re-check every time your volume steps up, because what worked at one tier breaks at the next.
Optimization (when you're past $100K/month and want to improve margins)
If you're new to payments, read these in order:
Test capture timing: For one product line, compare capture-at-shipment vs. capture-at-order. Measure "goods not received" disputes vs. operational complexity over 30 days.
Payment Methods (cards, bank transfers, wallets, and alternatives)
Run a 2-week checkout survey: "What payment method do you wish we had?" If fewer than 10% of customers mention it, it's probably not worth the integration effort.
Next Steps
- Authorization & Capture - How transactions work
- Settlement & Reconciliation - Where your money goes
- Payment Methods Overview - Your options
- Selling Internationally - If you get foreign orders
- Buying Payments - Choose the right processor
- Checkout Conversion - Stop losing sales
- Auth Optimization - Improve approval rates
- Interchange - Optimize your fees
- Digital Wallets - Add Apple Pay, Google Pay
- Going Global - International expansion
Start with The Guide, Pathway 1: Getting Started with Payments, It's a 20-minute walkthrough of how money moves, choosing a processor and understanding fees. This page is the deep dive.
See the Glossary for quick definitions of payments and fraud terms.
See Also
- Processor Management - Multi-processor strategy
- AVS & CVV - Verification signals
- 3D Secure - Authentication and liability shift
- Risk Scoring - Transaction scoring
- Money Held or Frozen - Cash flow impacts
- Payments Metrics - Performance tracking
- Refund Strategy - When to refund