Key Elements in an Online Payment
- Payment gateways: act as the courier between your ecommerce website where the customer enters their payment information and your payment processor
- Payment processors: take the information from the gateway, verify that the customer has the funds, and deposit the money in your merchant account
- Merchant accounts: receive the funds once they are processed
Steps in an Online Payment
- The customer enters their credit information at checkout.
- The payment gateway secures the data and sends it to the payment processor.
- The payment processor checks with the credit card network (e.g., Visa, Mastercard) to ensure that the customer has the funds to cover the purchase.
- The customer’s credit card issuing bank (e.g., TD, BMO, etc.) either accepts or rejects the payment request.
- The payment processor then sends the results (approved or denied) through the payment gateway, so the customer can view on the merchant’s website if the transaction was approved.
- The payment processor issues the funds to either the merchant account or the merchant’s bank.