Payment
Processing System
Before you implement a payment gateway, you should understand how
the Internet payment processing system works. Participants in a
typical online payment transaction include:
Customer: A holder of a payment instrument such
as a credit card, debit card or electronic check from an issuer.
Issuer: A financial institution such as a bank that
provides your customer with a payment instrument. The issuer is
responsible for the cardholder's debt payment.
Merchant: your e-commerce site, which sells goods
or services to the cardholder via a web site. A merchant that
accepts payment cards must have an Internet Merchant Account with
an acquirer.
Acquirer/Bank: A financial institution that establishes
an account with you, the merchant, and processes payment authorizations
and payments. The acquirer provides authorization to the merchant
that a given account is active and that the proposed purchase
does not exceed the customer's credit limit. The acquirer also
provides electronic transfer of payments to your account, and
is then reimbursed by the issuer via the transfer of electronic
funds over a payment network.
Payment gateway: Operated by a third-party provider,
the gateway system processes merchant payments by providing an
interface between your e-commerce site and the acquirer's financial
processing system.
Processor: a large data center that processes credit card transactions
and settles funds to merchants, the processor is connected to
your site on behalf of an acquirer via a payment gateway.
1. Customer places an order online from a web page on your secure
transaction page. Your site replies with an order summary and
online receipt.
2. The customer sends the order, including payment data to you.
The payment information is encrypted by SSL pipeline set up between
customer's web browser and your web server's SSL certificate.
The information is sent through the payment gateway to their transaction
server.
3. The server sends the encrypted data to your credit card processor,
using dedicated and secure lines. The credit card processors process
your payments and send the money to your bank, where it is deposited
into your account. Your ecommerce site requests payment authorization
from the payment gateway, which routes the request to banks and
payment processors.
4. Once the authorization process is complete, the customer receives
an approval or decline response and the payment gateway server
stores the transaction. This entire process takes around 3 seconds!
Transactions are automatically settled each day and are funded
within two to three business days.
5. At the same time, the online vendor, confirms the order and
supplies the goods or services to the customer upon receiving
credit card approval.
Merchants can check the status of transactions by contacting their
bank. If you have a Merchant Account with First Horizon they will
send you a settlement report every 3 days. Outsourcing to a payment
service provider is the best solution for secure, fast transactions
online.
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Setting
Up Your Merchant Account:
After you've built your site, selected your payment gateway, all
you need to start accepting online payments is an Internet merchant
account with a financial institution that enables you to accept
credit cards or purchase cards for payments over the Internet. Be
sure your financial institution supports the following processors:
