While features will vary from system to system, online payment software should contain some or all of the following capabilities: Common Capabilities of Payment Processing Software Online payment processing software plays a pivotal role in this process, helping to pass authorization from the merchant to the issuing bank, payment through the card network from the issuing bank and settlement between the merchant site and the MSP. Funding: The acquirer/MSP deposits the funds into the merchant's account.įees accrued during this process are subtracted from the funds the merchant receives: The issuer collects an interchange fee the card network collects an assessment fee and, the payment processor collects a processing fee.The issuer then debits the funds from the cardholder's bank account, routing the funds back to the acquirer through the card network. Clearing: Acquirer/MSP accepts batched transactions from the payment processor, forwards them to the card networks, who then distribute payment to the corresponding issuer.Batching is important to allow time to manually review orders to check for fraud. Batching: Merchant compiles daily sales and submits transactions in a batch to the acquiring bank for payment.This request route is known as the payments value chain (see above). Authorization: Customer initiates the sale merchant requests authorization from customer's issuing bank via payment processor.There are four key stages in how online payments are processed when businesses use a traditional merchant account: Provide technology and support and oversees payment processing for acquirers. Payment processor: Organization/vendor that partners with acquirer to open merchant accounts.Govern bank cards, monitor processing, manage clearing and settlement/funding of transactions.
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