Payment Processing 101
Payment processing made simple.
The payment process can be a little confusing at first. So here's a quick breakdown of a typical in-store transaction between a consumer and a merchant. Simply click on each icon to learn more.
The merchant swipes the customer's credit or debit card through the point-of-sale terminal or software. For an online transaction, the customer enters in their own card information.
The card information is sent to the merchant's bank, which then routes the data through the payments system for processing. During online transactions, a “gateway” may supply the link from the merchant's website to the merchant's bank.
The merchant's bank sends the data to the card provider, such as Visa®, MasterCard®, American Express®, Discover®, then the data is forwarded to the customer's bank.
The customer's bank verifies that the card is legitimate, hasn't been reported lost or stolen, and that the account has enough credit or funds for the purchase.
The customer's bank generates an authorization number—confirming it has agreed to fund the purchase on the consumer's behalf—and routes it to the card provider.
The card provider forwards the authorization number to the merchant's bank, which then sends it to the merchant so the sale can be concluded.