What Happens in the Payment Process When You Order Online?
In most cases, the process of making a payment when ordering online involves several steps and vendors. E-commerce businesses must carefully monitor all aspects of the payment process in order to ensure a secure transaction for their customers.
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The Gateway
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After a customer submits the banking information through a secured payment page in the shopping cart system, it is sent to the merchant's gateway for processing. According to CyberStrong eShop, a gateway provides the electronic connection between the shopping cart and the rest of the payment process system. The gateway stores customer information, but only holds onto the first four to six digits of the customer's credit card. Depending on the merchant, the credit card may go through a fraud check to ensure it is a valid card.
Merchant Bank's Processor
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The gateway sends the customer information to the business's merchant bank's processor. The processor instantaneously transfers the information to the customer's credit card issuer through the credit card exchange. According to Razor Quote, the credit card exchange "is a network of financial entities that manage the processing, clearing and settlement of credit card transactions".
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The Issuing Bank
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When the bank that issued the customer's credit card, referred to as a the issuing bank, is contacted by the gateway it either authorizes or declines the charge. The status of the transaction is reported back to the gateway within seconds or a few minutes. If the transaction is approved, the credit card will have a temporary authorization until the gateway settles the transaction, either when the product is shipped or at a pre-determined time.
Merchant's Bank Account
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After the gateway receives the information from the issuing bank of the customer's credit card, it is sent to the merchant's bank account where it is settled. The funds are then available for the business to withdraw.
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References
- Photo Credit two credit cards isolated on the white image by Elnur from Fotolia.com
