Electronic Card Payment Process

The following steps will give a broad overview of how a credit card or a bankcard transaction flows. Lets take a scenario of transaction happening at a retail merchant's end.

1. A customer initiates a transaction by placing an order using a credit card.
2. The merchant sends the transaction details to the merchant's payment gateway. Details include customer's name, address, identification info and the amount of purchase.
3. The payment gateway, on receiving the information, checks its database to identify the acquiring bank.
4. The payment gateway sends transaction information to the acquiring banks payment processor.
5. The payment processor identifies the issuing bank on examining customer's credit card number and other info.
6. The payment processor sends the customer information and transaction amount to the issuing bank.
7. The issuing bank examines the information and also runs the check on customers account balance to check if there are enough funds to cover the transaction order. At the same time, it verifies that the billing address on the order matches the billing address on file for the credit card [Address Verification Service].
8. If there are sufficient funds or credit allowane to honor the transaction, the issuing bank will send an authorization code back to the payment processor and will block the amount equivalent to transaction order amount in the customer's account.
9. In case of fraudulent account or insufficient funds or invalid billing address, the issuing bank will deny the transaction and send transaction declined message back to the payment processor.
10. The payment processor in turn sends the authorization code or declined message to payment gateway.
11. The payment gateway then sends the status to the merchant, where the transaction was initiated and merchant closes the transaction accordingly.

Electronic Payments Index

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