The Coordination Of Three Units Of Credit Card Payments
Since the time of our school education, the working of a computer has been permanently tattooed in our brain as a central processing unit that combines the functioning of three units; arithmetic logic unit, central processing unit and memory unit to give the desired output. Replicating the same functioning method into the modern era of digital shopping, three elements of commercial finance take care of online transactions as a cohesive process, giving the result of order completion. The three elements are payment gateways, payment processors and, customer account and merchant account services.
The customer who is the payer has an account with a bank which is the source of the payment or a credit card, shopping card etc from the same or a different provider. The card is used for initiating the payment and is regulated by an acquiring institution like Visa for validating and fixing the charges and conversions. On the other end is the merchant account service provider which creates and manages an account for receiving the payments from the customer’s issuing bank on behalf of the merchant.
When the card is used for a transaction to be paid to the merchant account, the merchant account provider sends an authorization request to the card issuer and the bank issuing the card or paying account gives the permission to proceed with the transaction. The intermediate payment processor carries out the actual transaction. After a series of proceedings, the merchant ships the order and then the acquiring bank clears the amount, thereby completing the order.
The payment gateway between the buyer’s web browser and the merchant account’s browser encrypts the transaction data and sends it to the concerned side for authorization. Once the requests are authorized, the response is also taken by the gateway and the data to be processed for the payment. The processed payment is then transmitted to the required interface. Payment gateways can also be entitled to functions like screening payment and shipping orders, managing sales, allowing digital payments through Crypto Code and outward payments and analyzing business.
The payment processor analyzes the authorization requests received from the payment gateways. It also receives the completed responses to authorization requests from the merchant and customer sides and sends them to the payment gateways. The responses for processing the payments are actually carried out by the processor. The merchant’s pending settlements and deals with acquiring banks are also taken care by the payment processor in such a way that the business operation continues without monetary interruption.