GPWA Times Magazine - Issue 26 - October 2013

Quick, seamless – and very complicated How online payment processing really works By Lorenzo Pellegrino E ver wondered how money travels from your bank account, credit card or eWallet to a merchant? When done right, the movement of money from bank accounts and credit cards through purchase completion at ca- shier pages is seamless and quick. But how does this happen? The payment process is quite complicated. A network of businesses all work together to deliver the payment solutions that we all enjoy using in our everyday lives. Pay- ment processing involves a complex in- frastructure of specialized, cutting-edge technology, fraud prevention techniques, security tactics, technical integrations, banking relationships and more. There are several ways that consumers can transact with merchants online and in the real world. They could use traditional payment methods such as credit or debit cards which are linked to personal bank accounts or choose alternative online pay- ment solutions like prepaid cards, eWal- lets or vouchers. Payment Service Providers When money moves from your bank ac- count, credit card or eWallet to a mer- chant, it’s a Payment Service Provider (PSP) that helps it get there. PSPs initiate a series of computer processes that initiate, verify and accept or decline multiple pay- ment methods on behalf of the merchant through secure Internet connections. A payment gateway is the infrastructure that allows a merchant to accept multiple forms of payment via one interface. PSPs are connected to multiple acquiring banks (the bank that accepts or acquires credit and debit card payments and pro- cesses them), credit card associations (e.g., Visa/MasterCard) and issuing banks (banks that have actually issued the credit card). A good PSP will fully manage rela- tionships with the external network, make necessary technical connections, manage the risk and handle the transfer of funds to the appropriate bank accounts. Mer- chants are freed from the task of estab- lishing multiple connections and relation- Quick, seamless – and very complicated

RkJQdWJsaXNoZXIy NDIzMTA=