A payment processor can be a third party or an acquiring bank that is chosen by a merchant to facilitate all payments that are being made through the acquiring bank. The method of payment processing involves several steps thus all e-commerce businesses should take precaution in ensuring that all transactions are carried out in a secure and safe manner.
Step by step of payment processing
The following is a step by step guide of how online payment processing is performed.
- After a consumer decides to make a payment online, they have to go through a number of steps in order to confirm and send their order.
- The merchant receives the order and sends an authorization request to the payment processor (PayPal, FDMS etc).
- The payment processor then sends a request to the issuing bank/acquiring bank for authorization of the payment. There are various details of the customer that the request will authorize, these include;
- Credit card number
- Card expiry date
- Card billing address
- Total amount of order
- Card security code (CVV)
- The issuing bank/acquiring bank will authorize the following details;
- Confirm card number and expiry date
- Check that amount of order
- Verify billing address provided
- Verify card security code
- The issuing bank will send authorization to the payment processor with either approving or declining the transaction.
- The payment processor will then respond to the authorization by sending a unique code to the merchant, allowing the payment to be processed.
- The customer is allowed to continue with the rest of the payment, reviewing and finalizing their order as it has gone through authorization.