How do online credit card payments work?

Key Elements in an Online Payment

  1. Payment gateways: act as the courier between your ecommerce website where the customer enters their payment information and your payment processor
  2. Payment processors: take the information from the gateway, verify that the customer has the funds, and deposit the money in your merchant account
  3. Merchant accounts: receive the funds once they are processed


Steps in an Online Payment

  1. The customer enters their credit information at checkout.
  2. The payment gateway secures the data and sends it to the payment processor.
  3. 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.
  4. The customer’s credit card issuing bank (e.g., TD, BMO, etc.) either accepts or rejects the payment request.
  5. 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.
  6. The payment processor issues the funds to either the merchant account or the merchant’s bank.
Source: https://www.bigcommerce.com/blog/ecommerce-payment-processing/

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