For Internet Merchant Accounts to be able to process card payments, they need a replacement for the physical point-of-sale terminal. A ‘payment gateway’ facilitates the transfer of funds from the customer’s account to that of the Merchant Account. A payment gateway can be either a virtual desktop download or a real-time processor requiring access to the internet.
But where is your money during each stage of the process? Here is the process involved with facilitating card payments through a payment gateway:
- A customer enters their card details into an online form or through a third party application.
- The data is then encrypted by the browser and sent via SSL to the merchant’s webserver.
- The card details are then forwarded to the payment gateway, again via an SSL connection.
- Information is then transferred through the payment gateway to the payment processer used by the merchant’s acquiring bank.
- The information is then passed to the card association (Visa, Mastercard, American Express etc)
- Fraud and debit checks are then undertaken and the payment is either authorised or declined.
- This information is then passed back from the processer to the payment gateway.
- Acting as a ‘go between’, the payment gateway forwards the authorisation to the website.
N.B Steps 1-8 usually take under 5 seconds
- The merchant completes the order and fulfils whatever purchase is made
- All authorisations are submitted by the merchant in a ‘batch’ at the end of the day.
- The acquiring bank settles the request with the card issuer and desposits the funds into the Merchant Account.
N.B Steps 9-11 usually takes up to 3 days.