A payment processor handles transactions between two parties. The two most important parties involved in payment processing are the merchant and the customer. The payment processor processes the data provided by the customer such as credit or debit card details to complete the payment Processed to the merchant's preferred bank account.
However, as we explain in this article, there may be other parties involved in payment processing.
In most traditional forms of payment processing , the payment processor includes the following parties:
Customer
Customer’s bank or credit card company
Business organization
Entrepreneur’s bank
Payment processor
Payment gateway (if is) not yet part of the payment processor)
Chlistian Belmont, Marketing Manager at Plixpay said - “Both business organizations and customers must understand the role of a payment processor to avoid any payment hurdles” Let’s take a closer look at the feature
Both business organizations and customers must understand the role of a payment processor to avoid any hurdles in payments. Let’s take a deeper look at the functions of everyone involved in payment processing.
Customers
Anonymous woman choosing clothes in store
Customers can purchase online products and services from the merchant's website. Customers are redirected to the merchant's secure website to enter their payment details (with "HTTPS" prefix, "S" stands for secure). On a secure web page, customers enter their payment details. This information includes credit or debit card information, as well as any other information needed to complete the order.
The customer's personal and Payment information is encrypted and sent to a payment gateway or payment service provider authorized by the merchant to accept payments. Once the transaction is approved via credit card authorization, the merchant can complete the customer's order.
Customer's bank or credit card company Issuing banks use card associations with different providers to issue credit or debit cards to their customers.
Issuing banks are also responsible for ensuring that their customers pay off debts that customers accumulate through their credit lines. When a customer makes a transaction , the card-issuing bank will receive a card authorization request. The card-issuing bank will approve or deny the transaction based on the customer's current financial situation.
Business Organization
Man wearing a white long-sleeved shirt and holding a black pen
A commercial organization is a person or company that sells products or services. A commercial organization partners with an acquiring bank to operate a merchant account. A merchant account allows a commercial organization to sell its products and services to customers and receive payments from its customers. First question that comes to mind Yes, what is an acquiring bank?
What is an acquiring bank?
An acquiring bank is a registered member bank of card networks such as Visa or MasterCard. The acquiring bank coordinates approvals with credit and debit card networks Transactions by commercial organizations. Acquiring banks allow commercial organizations to conduct transactions. They accept credit and debit cards by issuing merchant accounts.
What is a merchant account?
Acquiring banks issue merchant accounts to commercial organizations. Business organizations must accept the terms and conditions set by completing a merchant account application by card associations such as Visa or MasterCard.
Business organizations receive a unique account number that identifies the business organization and acts as the owner of business-related transactions .Business organizations must pay various fees to maintain the privilege of their merchant accounts.
Business organizations can pay merchant account fees on a monthly basis, a percentage of each transaction, or both. Each customer in the merchant account Transactions conducted on are forwarded to the acquiring bank.
The acquiring bank is connected to the appropriate card association network and coordinates with the cardholder's issuing bank to complete the transaction. The cardholder's issuing bank approves or denies the transaction based on funds
Security while processing payments through payment gateway
People shopping online
Merchant accounts access the payment gateway to complete transactions. Business owners process transaction information by submitting payment information to them through the payment gateway The acquiring bank is sent with the selected payment processor.
How does the payment gateway ensure the security of the transaction?
The payment gateway is the software or server that retrieves the transaction status after the payment request is sent to the business owner’s bank. Card swipe machines in the UK act as a payment gateway between the cardholder and the bank.
Payment gateways maintain security by protecting vulnerable data, such as credit card numbers and other information, from fraudulent activities. Payment gateway implementation Traditional rules and security standards called the Payment Card Industry Data Security Standard (PCI-DSS or PCI) to ensure the security of payment information.
What is a payment service provider?
Most e-commerce businesses The business owner has to pay a per-transaction fee to get the services of the payment service provider (PSP). The payment service provider helps the business owner to successfully access the payment gateway for transactions.
The business owner's customers are in the payment service provider's With the help of secure HTTPS web pages. Payment service providers ensure that all transactions comply with the established security protocols to ensure maximum transaction approval rate.
Business owners can get additional services with the help of payment service providers Payment service providers. Some of these services include compliance with Payment Card Industry Data Security Standards, language translation services, processing transactions in different currencies, and fraud prevention.
Payment service providers have access to payment information provided that it is paid by the customer from The gateway forwards to the payment processor.
Role of the payment processor
Man Woman Hands
Payment processors are enforced by specific credit card associations. These regulations include those related to chargebacks, fraud and identity Misappropriation of relevant rules. The payment processor ensures that all transactions comply with the necessary requirements stipulated by the relevant credit card association.
The payment processor may transmit payment information directly to the credit card association to verify the transaction status.
Card How does authorization work?
Card authorization is a mandatory check on the cardholder's account to see if it has sufficient funds to complete the transaction. The card is activated whenever you use a debit or credit card to purchase a product or service. Authorization.
The business holder's acquiring bank requests card authorization to check whether the customer's issuing bank has funds for the transaction. The cardholder's issuing bank decides to approve or deny based on the cardholder's available funds or credit limit. Transaction.
If there are insufficient funds in the cardholder's account, the transaction is declined. If there are insufficient funds in the cardholder's account, the funds in the cardholder's account will be frozen. The transaction is approved. After payment, the cardholder will A transaction receipt is received and the transaction amount is credited to the business owner’s acquiring bank.