A shopping cart gathers order information and then passes it on to a gateway, the Internet equivalent to a credit card swipe machine. The gateway passes the information to your merchant account that deposits the money into your bank.
Shopping Cart-gathers info and sends it to the gateway.
Gateway-receives order information and sends it to your merchant account.
Merchant Account-processes the information and authorizes the transfer of money into your bank.
There are two types of shopping carts. Hosted and, for lack of a better term "not hosted." With a Hosted shopping cart, the shopping cart software resides on someone elses server. This is analogous to a having a Yahoo e-mail account. You're using their software through your browser. Very quick and easy to set up.
Alternatively, you can buy shopping cart software and install it on the same server your own website resides. Thus you host your own shopping cart. Not quite so quick and wasy to set up, but can be cheaper and gives you much more flexibility.
Offsite (Hosted, ASP) Shopping Carts
PayPal provides a shopping cart, but you don't have to have a merchant account. This is a great way to get started and test the waters. But some will be offput by a PayPal shopping cart. It's a dead giveaway of a small operation. Nevertheless, this is a great service that can save you all those annoying monthly service fees. It's a free credit card acceptance servicesave for a modest fee for each transaction. Feel free to demo it by paying me.
Signup with PayPal by clicking on the following graphic.