The processor verifies and approves the transaction (if it doesn’t, we skip to step 7).The gateway then sends the transaction to the payment processor.The business/merchant submits the transaction through the payment gateway.A customer purchases an online product or service and gives the merchant their details.Now, let’s look at the standard online payment process step by step: Yet, there are gateways, processors, and customers' and merchants' banks. First, there's the customer and the business/merchant. Now, it's time to examine how online payment platforms work. We looked at the essential concepts involved in digital or online payments. These methods encompass payment companies, large banks, and independent contractors. There are different ways for businesses to request merchant accounts. It's what allows merchants to process electronic payments. What is a Merchant Account?Ī merchant account is a business bank account. A payment processor handles transactions between the customers' and merchants' banks. The latter is then responsible for sending it to the relevant card network for approval. When making purchases, the payment gateway sends the information to a processor. These ventures manage the logistics of accepting debit or credit card payments. Payment processors are companies or financial institutions. A payment gateway is a mediator between online transactions and the payment processor. The cloud-based software reads and transfers info from a client to a merchant's account. What is a Payment Gateway?Ī payment gateway is like an online point of sale. Let’s take a look at what each of these is. Often payment platforms have payment gateways, payment processors, and merchant accounts. This variety is beneficial for both buyers and merchants. A digital payment platform offers two or more online payment technologies. This article will explore digital payments and what crypto brought to the table. Meanwhile, there has also been a strong desire to take banks out of the financial equation. Payment platforms found a way to kill both birds with one stone. And also the need to centralize the various payment methods available. On one side is the need to increase security for payment information. The rise of online purchases saw two problems to solve. What's more, we even have digital currencies! Today, we pay our bills online and swipe our smartphones at stores. ![]() As we spend more time on smartphones, this has also played a part in payments. ![]() But things kicked off in the late 90s with internet banking. The 1950s saw the arrival of credit cards, and the 70s the arrival of debit cards. How we pay for things has changed in the last few decades.
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