Online payments are getting faster, safer, and more popular. Although you can’t see it, there’s a lot going on behind the screen. Do you know what happens in the few second while websites are processing payments? If you don’t, here’s how online payment works:  

First, your business needs a special bank account that can process electronic payment card transactions. This is called a merchant account, and it requires an acquiring bank—also known as a merchant bank or acquirer. Typically, there are fees associated with a merchant account. Whether you’re a brick-and-mortar business or sell online, you need a merchant account and American Verification Processing Solutions offers a great option for your business.

Customers have a different type of account that is managed by an issuing bank. When they hit the “shop” button on your website, they’re sending money from their issuing bank account to your merchant account. This is only possible because of payment gateways and payment processors.

A payment gateway is a software or system that connects your website to your merchant bank. Payment gateways encrypt and transmit financial data provided by your customers and send it to the payment processor used by the merchant’s acquiring bank.

The payment processor is in charge of the communication between your merchant bank and the customer’s issuing bank. However, the payment processor isn’t just an errand boy: It also verifies if the information filled out by your clients is valid, and performs a few other checks to prevent fraud. Once the payment processor confirms that your customer has funds available for purchase, the transaction is finally authorized.

Let’s refresh your memory by summing up how online payment works:

  1. You need a merchant account to process electronic payment card transactions.
  2. A customer fills out information from their credit card / personal account, which is granted by an issuing bank.
  3. The payment gateway encrypts and transmits the information from your website to the payment processor used by your merchant bank.
  4. The payment processor checks if the information is valid and if there are funds available. Then, it authorizes the transaction.
  5. The money is transferred from your customer’s bank account to your merchant account.  

At American Verification Processing Solutions, we offer customized payment solutions for your business. Contact us through our website or call 1 (800) 719-9198 to get started.