Perhaps you are wondering what these payment processors are. They are types of companies that are in most cases considered to be third parties. Moreover, these companies are chosen through a tradesman to manage a number of businesses across varied mechanisms e.g. debit cards and credit cards for banks that receive the traders finances.
You can either categorize a payment processor as a back-end or a front-end. The back-end type of payment processor is meant to receive any form of agreement acquired from the front-end processors. However, the front-end processors are known to have a number of interdependence with different settlement services, supply authorization, and card associations to the seller’s bank.
The payment gateways are important as they are known to simplify information transfer between the acquiring bank or the front end processor and the payment portal in use. For instance, the payment portal can be a mobile phone, or a website.
For a payment processor to function efficiently there must be an issuer and an acquirer. You have to understand that the issuer’s function is simply to offer credit line to be used in the seller’s or the buyer’s procurement. The acquirer is an institution that is permitted either by the MasterCard or Visa in accepting their cards.
Below is a guiding step in understanding how the payment processor works in serving you efficiently as a customer, brought to you by https://thesoutherninstitute.com/cbd-merchant-services/:
1. As customer, you can either click on the “order” button to place an order on the website or enter the details of your card.
2. ln a case where the order is through a website, you as the customer will encipher the information that is meant to be posted among the merchant’s server and the browser. However, you can also use an SSL (Secure Socket Layer) for encoding. It is important that you know the payment processor is able to let you sent the transaction data from your browser to the gateway. This can be made possible even without going through the dealer’ system. In such a case, it lowers the PCI DSS agreement responsibilities without redirecting you from the website.
3. Afterwards, the dealer’s server then sends the business details to your payment gateway. Note that there is an added protection encoding connection platform towards the payment server that is provided using the payment gateway.
4. Next, it is now the duty of the payment processor to forward the information related to the business to your bank where you are entitled as an account holder.
5. lt is the work of the payment processor to send all related information to your card regarding the transaction that you have conducted. The card can be an American Express, a Master Card, or a Visa among others. Later on depending with the card alliance, it channels the transaction to the proper bank where you are an account holder.
6. When the bank-a credit card issuer gets the permission appeal, it either performs a debit or credit check. After completion, the issuer forwards the response again to the processor using the same channel as that deployed during authorization. Its usually accompanied with some remarks e.g. denied or approved.
7. lt is the work of the issuer to accept then the authorization that is linked to either you the customer or the merchant, approving a certain amount to be paid.
8. The message is sent and received by the gateway in charge of the payment process. Here, it quickly forwards it to the website where it is read as pertinent response. This then reflects back to both you the card holder and the merchant, a process known as Authorization or simply “Auth”.
9. lt is now the work of the merchant to fulfill the order. Remember, this process can be repeated again and again so as to “finish” the transaction. For the transactions to receive authorizations, the merchant is supposed to submit them as a batch.
10. Finally, the credit card issuer makes payments to the acquiring bank that ends the settlement process. Later on, the acquiring bank will make subsequent deposits of the funds that have been approved into your account where you can make any withdrawals anytime. You have to understand that this whole transaction process takes a maximum of three days respectively.
Above are helpful steps to make you understand how the payment process simply works. Master them today and know how your payment gateway serves you every time.