So you there's a payment gateway that transfers the money to your merchant account, and then what? I'm assuming that the money from the merchant account is transfered to a bank account. If so, does it have to be a business account?
If you are a sole proprietorship, you do not need to have a business account that's for sure.
Basically, a credit card transaction works something like this:
Authorization:The first step is called the Authorization which is the process of requesting an authorization from the bank or company that issued the customerís credit card. For Internet Merchants, the shopping cart is connected to or integrated with a Payment Gateway. For Retail Merchants, the card is swiped through a magnetic reader on the Point of Sale (POS) Terminal. The Payment Gateway and POS Terminal then connects to a Front-End Processor. If the credit card used is a Visa or Mastercard (V/MC), the Front-End Processor transmits the authorization to the Visa or Mastercard Associations who then rout it to the appropriate Issuing Bank. Otherwise, the authorization is transmitted to the appropriate Card Issuer (Amex, Discover, Diners, JCB) for approval. The Issuing Bank or Card Issuer authenticates the Cardholder and approves or declines the transaction amount. It is important to note that no money changes hands during the Authorization. Merchants must re-present the transaction to receive payment. For Retail Merchants, the transaction is stored on the POS Terminal. For Internet Merchants the transaction is stored on the Payment Gateway.
Merchant Balancing: The second step is called Merchant Balancing which is the process of totaling the transactions and balances by card type and transmitting them to the Front-End Processor. This is also known as Batching Out. Most POS Terminals and all Payment Gateways perform an auto close function at the end of the day and batch out automatically.
Capture: The third step is called the Capture which is the process of requesting payment from the Issuing Bank or Card Issuer. The Front-End Processor matches the Authorization data to the settlement data and transmits the card capture file to a Back-End Processor for V/MC transactions or to the appropriate Card Issuer for other card types.
Clearing: The fourth step is called Clearing. During this stage the Back-End Processor performs compliance checks and risk management procedures and transmits the transaction to V/MC or to the appropriate Card Issuer for other card types.
Interchange V/MC Only): The fifth step is called Interchange. During this stage the V/MC Associations sort the transactions by Issuing Bank and transmit them to the appropriate Issuing Banks for settlement.
Settlement: The sixth step is called Settlement. During this stage the Issuing Bank calculates fees and deductions (i.e., chargebacks) and routs the net funds to the V/MC Associations who then sort them by Acquiring Bank and transmit them to the appropriate Acquiring Bank for payment to the merchant. For other card types, the appropriate Card Issuer determines the daily deposit for the merchant.
Merchant ACH: The final step is the Merchant ACH. During this stage the Acquiring Bank or Card Issuer transmits the merchant deposit to the merchantís checking account.