Processing Credit Cards with Ruby on Rails

This article is for anyone who is trying to handle credit card transactions on-line using Ruby on Rails.1 If you are like me, the fact that Ruby on Rails is still in its infancy has probably left you pounding your head against the wall while looking for quick solutions to old problems like e-commerce. More than likely, the source of your headaches (aside from the pounding) is the lack of documentation, even with popular plugins. This article is the sum of hours of scouring the Internet trying to piece together everything about Active Merchant, SSL, Apache, et al., and make them all play nicely in a Ruby on Rails application.

For the entirety of this article, I will assume you have a bank merchant account and an merchant account.2 (Even if you don’t, the article should help if you plan on using the Active Merchant payment abstraction library plugin, which is what I use for my transactions.) will serve as an on-line third party to review our credit card transactions and issue an approval/rejection. It will then be up to our code to handle the response. Simple enough? Let’s get to work.

Get Your Login/Password (AKA Your API Login ID and Transaction Key)

To make all of this work, you are going to need to be able to talk to the servers. They won’t talk to you unless you have a login and password. If you have an account, then you should have a login and password to access their web site, but this isn’t the combo that you will need to process transactions. Instead, use that login to get into your account on their site, go to settings and look for the “API Login ID and Transaction Key.” This is what you need. These two random strings of characters are what your application will pass to to establish a connection.

If you haven’t already, now would be a good time to put your account in test mode to ensure you don’t accidentally process a transaction. If you don’t see big red banners all over your account page that read “test mode,” then your account is not in test mode.

Install Active Merchant with Subversion

Now, let’s get a copy of Active Merchant. Active Merchant is available from I have two things to say about Active Merchant: the code is great, but the lack of documentation makes it tough to start using, especially if you’ve never handled credit card transactions before. Hopefully this will help fill in some gaps.

Assuming you’ve already got your rails application built,4 change to the vendor/plugin folder and issue the following Subversion command:

svn co svn://

Generate Built-in Documentation

Congratulations! Active Merchant is now installed on your system. You probably feel more 1337 now, too, since you had some text scrolling on your screen, but I digress. Active Merchant will automatically be available to your application due to the init.rb file, which you can investigate if you’re curious.5 However, there is still some work left to do. One thing I definitely recommend is changing to the active_merchant folder you just installed and issuing the following command to install the built-in documentation:

rake rdoc

Once you do this, you will be able to open doc/index.html and view the generated documentation. It’s semi-helpful and will at least give you a baseline of what is available with the plug-in.

Built-in Active Merchant Documentation.

Test the Active Merchant Plugin

Next, you will need a few gems installed:

gem install money
gem install activesupport
gem install actionpack

If you want to run the unit tests for Active Merchant after installing these gems, first locate the test files in the test folder and replace the login and password with your API Login ID and Transaction Key. Then, from the active_merchant folder, there are unit tests and remote tests that you can run with:

rake test
rake test_remote

From this point, you are ready to start writing your test application to get the hang of Active Merchant. The next section deals with secure socket layer (SSL) connections that will allow you to encrypt the data your users send you. If you’re not interested in this just yet, skip ahead to the next section to start writing test code for Active Merchant.

Encryption Key and Certificate Generation for SSL Security

One thing you will definitely want to do is receive your customers’ sensitive information over an encrypted connection. To do it right, you’ll need to generate some encryption keys. This can easily be done with openssl:

openssl req -new -nodes -keyout private_ssl.key -out public_ssl.csr

This will create two keys, a private and public key. The details of each are well documented6 so I’ll not cover the details here. However, before you turn on your production server, you’ll want to get your certificate signed by an authoritative agent to avoid warning messages displaying on your clients’ browsers. You will have to pay for a signed certificate. In the mean time, you can sign your certificate yourself for testing:

openssl x509 -req -days 30 -in public_ssl.csr -signkey private_ssl.key -out public_ssl.cert

Configure Apache to Handle HTTPS on Port 443

Lastly, you need to set up Apache to accept connections on port 443 and use your keys to encrypt them. Assuming you’re using virtual hosts, the following is a minimal virtual host file:

<VirtualHost *:443>
    DocumentRoot /path/to/your/webroot/
    <Directory "/path/to/your/webroot/">
      Options ExecCGI FollowSymLinks
      AllowOverride all
      Allow from all
      Order allow,deny
   SSLEngine on
   SSLCertificateFile /path/to/your/ssl/public_ssl.cert
   SSLCertificateKeyFile /path/to/your/ssl/private_ssl.key

With that virtual host installed, restart Apache. You can test your SSL connection with the following command:

openssl s_client -connect

Or you can just go to in your web browser (note: https, not http).

Outbound SSL

One thing you should make note of is that Active Merchant will connect to using an encrypted SSL connection on port 443. Much like you will encrypt your users’ data coming in, will do the same. If your firewall is blocking outbound traffic on this port, you may get some interesting errors. Ensure you allow this traffic out.

Build Your Test Ruby on Rails Application

Great! We’ve got Active Merchant installed and we’ve got a secure server. All we need to do now is process some transactions. The leetsoft web page, as well as the built-in documentation, gives you a snippet of sample code to get started with, but you’ll probably just end up more confused and informed just enough to be dangerous. The following is a modification of that code with some explanations and some variables that can send output to a view file for quick feedback in your browser of choice.

I recommend you create a controller to handle your testing. Later on you can choose to modify it, delete it, or whatever. For now we just want to pass a successful transaction to, have them acknowledge it, and see some sort of status.

class PaymentTransactionTestController < ApplicationController

  require 'money'

  def process_payment
    amount_to_charge = Money.ca_dollar(1000) #ten US dollars
    creditcard =
      :number => '4222222222222', test card, error-producing
    # :number => '4007000000027', test card, non-error-producing
      :month => 3,                #for test cards, use any date in the future
      :year => 2010,              
      :first_name => 'Mark',      
      :last_name => 'McBride',
      :type => 'visa'             #note that MasterCard is 'master'

    if creditcard.valid?
      gateway = ActiveMerchant::Billing::Base.gateway(:authorized_net).new(
        :login => 'abcdefgh',         #API Login ID
        :password => 'abcdefghijklm') #Transaction Key

      options = {
        :address => {},
        :billing_address => { 
          :name     => 'Mark McBride',
          :address1 => '1 Show Me The Money Lane',
          :city     => 'San Francisco',
          :state    => 'CA',
          :country  => 'US',
          :zip      => '23456',
          :phone    => '(555)555-5555'

      response = gateway.authorize(amount_to_charge, creditcard, options)

      if response.success?
        gateway.capture(amount_to_charge, response.authorization)
        @result = "Success: " + response.message.to_s
        @result = "Fail: " + response.message.to_s
      @result = "Credit card not valid: " + creditcard.validate.to_s

Your view code can be quite simple:

<%= h @result %>

That’s it. This small code not only allows you to do the testing described in the next section, but it should be the bulk of what you need to get up and running. You’ll obviously need to make this fit your application, but the basic template and data structures will still apply.

Logic of Active Merchant Test Application

The code above is fairly self-explanatory, but here are the functionality highlights. First, it uses the Money class to create an object that represents $10. Second, it creates an object to represent the credit card against which the $10 will be charged. Next, it checks to see if the card is valid and if so, it attempts to authorize the $10 against it using the billing address passed in the options hash. If the authorization is successful, it captures the charge against the card and the transaction is complete. If any of the steps above fail, it returns an appropriate status code.

Testing with Mock Data offers some nice features when it comes to testing. With minimal effort, you should be able to pass transactions in a test environment in the same manner you will do in your production environment.

First, ensure your account is in test mode by logging on through the web site and ensuring you see the appropriate big, red test mode banner. If it’s not, you can find the option to turn it on in your settings. Once it’s on, you can use Active Merchant to send as many test transactions as you like.

As you probably noticed in the credit card hash above, there are two numbers. Both of these numbers are test credit cards provided by They will aid you greatly while in test mode.7

The non-error code number (annotated in the comments in the code) will act just like a real card with the exception that you can’t validate it against a billing address. By using the non-error number, you can successfully use methods like “capture,” which will charge the card for the amount specified. If you have them turned on, you’ll get email receipts from in addition to the successful responses your view will produce.

Text from an emailed transaction receipt.

Perhaps even more useful, though, is the error producing card number. This card will intentionally return the Response Reason Code8 equaling the passed dollar amount. For example, if you pass $10 as the capture value, you will get the Response Reason Code 10, “The account number is invalid.”

Just the Tip of the Iceberg

As stated in the intro, this guide only covers the essential functionality of Active Merchant and only for the AIM API. The Active Merchant project is up and coming so be sure to check the source for updates and hopefully someday, more formal documentation than this.9


  1. Ruby on Rails is an MVC framework for the Ruby language. More information can be found at ↑
  2. A bank merchant account is necessary to have money deposited into your back account via sales transactions. Most major banks offer merchant accounts, so a call to their sales department will likely yield all the information you need. As for, they provide the APIs necessary to take one of your customer’s credit card numbers and securely create a purchase transaction against it. Again, if you have questions, their sales department is more than helpful and will give you all sorts of details not covered in this article. ↑
  3. Tobias Luetke, Active Merchant,, accessed from on 20 January 2007. ↑
  4. If you don’t already have your rails application built, make a folder and type “rails test_active_merchant” to build one. The only code you’re going to need for the remainder of this test is included in the remainder of this article. However, you should note that this article is geared toward the Apache web server, so if you’re planning on using the WEBrick server, you may want to skip the SSL section and test your server without encryption. ↑
  5. If you’re unfamiliar with how plugins work, check out for a nice walk through. ↑
  6. OpenSSL Manual Page,, accessed from on 22 January 2007. ↑
  7. Advanced Integration Method (AIM) Implementation Guide, Authorize.Net, pgs. 49-50, accessed from on 20 January 2007. ↑
  8. Ibid, 26. ↑
  9. The Google forum for Active Merchant provided me with quick answers when I started with Active Merchant. Be sure to look there if you have detailed questions and problems. ↑
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