The payment processing journey in e-commerce

As you develop your e-commerce platform, you need to factor in how you will be getting payments from your customers. Nowadays, online payment gateways offer secure transactions, ensuring that both the merchant and clients are safe from fraudulent activity.

Normally payment processing looks simple to the client, but so many activities take place behind the scenes. Therefore, if you are wondering how this process takes place, then you are in the right place. Here is a guide that will help you understand online payment systems.

What the seller requires

Before you can start accepting payments from clients, you need to register for a merchant account. The account has a unique set of numbers, similar to a bank account, which tells the acquiring bank that the transaction made belongs to you.

The acquiring bank, in this case, is the financial institution that processes credit and debit cards on behalf of the merchant. Please note that each merchant account comes with differing fees. They will charge you monthly or take a specific percentage from every transaction or product purchased.

What happens on the customer’s side

Once the shopper sees a product they want to purchase, they will click on it to make an order. During the checkout process, they need to enter their personal and payment details. The payment detail section will need to state their preferred payment option. It could be via credit, debit, or any other online payment method.

The work of the payment processor in this process

Normally, the checkout process is quick. It takes a matter of seconds, especially if the service provider you are using is stable and reliable. After the client hits the ‘okay,’ ‘yes,’ or whichever is available on your site, the payment processor will process the transaction via the payment gateway.

The software submits the purchase transaction information through the Cards Association Network, directing it to the issuing bank. The issuing bank, in this case, is the client’s bank account.

Once the account reaches the issuing bank, they will approve the transaction and charge the client’s card. Note that if you don’t have enough money or credit on your card, the issuing bank will decline the client’s transaction. The payment processor will then send the approval or denial details to you.

The card issuer will send the money to your merchant account if approved. The acquiring bank will then deposit the amount to you. You can access the amount from then on; nonetheless, some portion remains in your account if the client decides to ask for a refund.


There you have it. Note that the payment process is a quick process that takes a few seconds. When selecting the right payment processor, ensure that you consider the fees you will need to pay for each transaction and the amount of security it offers. You don’t want a situation where you put your client’s personal information in the hands of criminals.

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