• Skip to main content
  • Skip to primary sidebar
  • Skip to secondary sidebar
  • Skip to footer

Computer Notes

Library
    • Computer Fundamental
    • Computer Memory
    • DBMS Tutorial
    • Operating System
    • Computer Networking
    • C Programming
    • C++ Programming
    • Java Programming
    • C# Programming
    • SQL Tutorial
    • Management Tutorial
    • Computer Graphics
    • Compiler Design
    • Style Sheet
    • JavaScript Tutorial
    • Html Tutorial
    • Wordpress Tutorial
    • Python Tutorial
    • PHP Tutorial
    • JSP Tutorial
    • AngularJS Tutorial
    • Data Structures
    • E Commerce Tutorial
    • Visual Basic
    • Structs2 Tutorial
    • Digital Electronics
    • Internet Terms
    • Servlet Tutorial
    • Software Engineering
    • Interviews Questions
    • Basic Terms
    • Troubleshooting
Menu

Header Right

Home » ECommerce » ECom » How Payment Processing Works?
Next →
← Prev

How Payment Processing Works?

By Dinesh Thakur

         Payment processing in the online world is similar to payment processing in the offline or “Brick and Mortar” world, with one significant exception. In the online world, the card is “not present” at the transaction. This means that the merchant must take additional steps to verify that the card information is being submitted by the actual owner of the card, Payment processing can be divided into two major phases or steps: authorization and settlement.

 

Payment Processing—Authorization and Settlement

Authorization verifies that the card is active and that the customer has sufficient credit available to make the transaction. Settlement involves transferring money from the customer’s account to the merchant’s account.

Authorization: Online

A customer decides to make a purchase on a merchant’s Web site, proceeds to checkout, and inputs credit card information.

The merchant’s Web site receives customer information and sends transaction

information to the payment gateway. The payment gateway routes information to the processor. The processor sends information to the issuing bank of the customer’s credit card. The issuing bank sends the transaction result (authorization or decline) to the processor.

The processor routes the transaction result to the payment gateway. The payment gateway passes result information to the merchant.

The merchant accepts or rejects the transaction and ships goods if necessary. Because this is a “card not present” transaction, the merchant should take additional precautions to ensure that the card has not been stolen and that the customer is the actual owner of the card.

Payment Processing—Settlement

The settlement process transfers authorized funds for a transaction from the customer’s bank account to the merchant’s bank account, The process is basically the same whether the transaction is conducted online or offline.

 

You’ll also like:

  1. What are Electronic Payment Technology Issues
  2. EPS – What is Electronic Payment system?
  3. How the interactive graphics displayed works? Explain
  4. How BIOS (Basic Input Output System) Works
  5. Money payment: add numbers until desired sum is obtained
Next →
← Prev
Like/Subscribe us for latest updates     

About Dinesh Thakur
Dinesh ThakurDinesh Thakur holds an B.C.A, MCDBA, MCSD certifications. Dinesh authors the hugely popular Computer Notes blog. Where he writes how-to guides around Computer fundamental , computer software, Computer programming, and web apps.

Dinesh Thakur is a Freelance Writer who helps different clients from all over the globe. Dinesh has written over 500+ blogs, 30+ eBooks, and 10000+ Posts for all types of clients.


For any type of query or something that you think is missing, please feel free to Contact us.


Primary Sidebar

E Commerce

E Commerce Tutorials

  • EC - Home
  • EC - History
  • EC - Types
  • EC - Characteristic
  • EC - Limitations
  • EC - EDI Architecture
  • EC - Electronic Payment system
  • EC - EDI Standards
  • EC - Advantage
  • EC - EPT Issues
  • EC - Extranet
  • EC - Firewall
  • EC - E-Business Models
  • EC - Security Issues
  • EC - VPN
  • EC - CRM
  • EC - Electronic Cash
  • EC - B2B
  • EC - Electronic Wallet
  • EC - EDI

Other Links

  • E Commerce - PDF Version

Footer

Basic Course

  • Computer Fundamental
  • Computer Networking
  • Operating System
  • Database System
  • Computer Graphics
  • Management System
  • Software Engineering
  • Digital Electronics
  • Electronic Commerce
  • Compiler Design
  • Troubleshooting

Programming

  • Java Programming
  • Structured Query (SQL)
  • C Programming
  • C++ Programming
  • Visual Basic
  • Data Structures
  • Struts 2
  • Java Servlet
  • C# Programming
  • Basic Terms
  • Interviews

World Wide Web

  • Internet
  • Java Script
  • HTML Language
  • Cascading Style Sheet
  • Java Server Pages
  • Wordpress
  • PHP
  • Python Tutorial
  • AngularJS
  • Troubleshooting

 About Us |  Contact Us |  FAQ

Dinesh Thakur is a Technology Columinist and founder of Computer Notes.

Copyright © 2025. All Rights Reserved.

APPLY FOR ONLINE JOB IN BIGGEST CRYPTO COMPANIES
APPLY NOW