The process of payment processing.
The buyer only has to enter the card details and the order amount is automatically debited from the account. When using the services of different payment systems, the process of payment processing in the online shop is always the same. When a customer enters a bank card in the window of an online shop and receives a report of a completed payment, the following happens:
- The buyer places an order and enters information about his card on the website of the online shop or the payment system.
- Information about the order and the seller is sent to the payment system server via a secure connection (SSL).
- The payment system sends the payment information to the bank where the seller’s account is open.
- Information is sent from the seller’s bank to the bank that issued the card to the buyer.
- At the buyer’s bank, the information is checked for authenticity and availability of the credit on the buyer’s account. The answer with the results of the verification is sent back to the seller’s bank.
- The seller’s bank sends the response and payment information to the payment system. If approval to write off funds has been granted, the amount stated will be transferred to the seller’s account.
- The payment system sends the transaction results to the online shop.
- The buyer receives a report of payment (or refusal to accept funds).
Depending on the seller’s bank, the type of bank card and the payment system used, a fee may be charged.
The Visa, MasterCard, American Express and Discover payment systems are at the heart of the payment industry and support transactions between consumers, merchants, processing centers and banks. They have created special electronic networks that enable market participants to exchange information, collect data and process transactions.
Systems like Visa have built relationships with banks, and their technologies have penetrated deeply into and deeply rooted in the financial sector, which has created a high barrier for new players to enter this market. International payment systems also have low marginal costs, which makes their business models very attractive to investors.
American Express and Discover’s business models differ from Visa and MasterCard. They consolidate the functions of a receiving bank, an issuing bank and a payment system, open credit lines for their customers independently and issue payment instruments, thereby reducing the number of participants in transaction processing.
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