This account type does not interact with a real payment gateway, and does not actually collect any money. It can be used as a "Bank Transfer" or "Pay by Phone" option. Customers click a payment button to make a provisional reservation for the goods or services required, then contact the site and make the required payment by some offline method, so no gateway fees are payable. Once payment is confirmed, the administrator manually changes the payment status to successful, and delivers the goods or service.
This type of payment does not make sense for all applications, but can work well for advance bookings, where there is time for a manual payment process. It is also useful for testing because it is easy to setup, and from an application's point of view, there is no difference between an offline payment and a real payment.