PAYMENT PROCESSING

Archit Jain

The process and service that automates payment transactions between the shopper and merchant.

A system of computer processes that process, verify, and accept or decline credit card transactions on behalf of the merchant through secure Internet connections.

WHAT IS PAYMENT PROCESSING ?

Cardholder

Merchant

Issuing Bank

Acquiring Bank

Payment Processor

Card Association Payment Gateway

PLAYERS INVOLVED

STEPS INVOLVED

Authorization Batching Clearing Funding

DEBIT Online Debit (PIN based)

Debits are reflected in the user’s account immediately.

Transaction secured with the personal identification number (PIN) authentication system

Offline Debit (Signature based)

Subject to a daily limit, and/or a maximum limit equal to the current /checking account balance from which it draws funds. Require 2–3 days to be reflected on users’ account balances.

Thank You

Issuing Bank

Financial institution that issued your credit card, sends your statements, offers you credit, and provides the card’s rewards and benefits.

Responsible for card security, compensates customers for losses due to fraud, and absorbs losses when customers default.

Provides businesses and individual merchants with the ability to accept credit, debit and prepaid cards as payment for goods or services.

Accept or acquire credit card transactions from banks that issue credit cards to consumers, called issuing banks.

Maintains a merchant account for each business it serves which allows it to accept transactions on behalf of a business and deposit funds from sales into the business' deposit account.

Acquiring Bank

Payment Processor

A company appointed by a merchant to handle credit card transactions for merchant’s acquiring banks.

They  have connections to various card associations and supply authorization and settlement services to the merchant banks’ merchants

An acquiring bank supplies the financial backing to support the risk of merchant processing and to fund merchants for sales.

Visa and MasterCard are not banks and they don’t issue credit cards or merchant accounts.

Primary responsibilities of the Card Association are to govern the members of their associations, act as the link between issuing and acquiring banks.

Card Association

Payment Gateway

An e-commerce application service provider that authorizes credit card payments for e-businesses.

Protects credit card details by encrypting sensitive information, such as credit card numbers, to ensure that information is passed securely between the customer and the merchant and also between merchant and the payment processor.