How do card payments work?

Aditya Sengupta

Aditya Sengupta, travaille chez Instamojo

Répondu il y a 127w · L'auteur dispose de réponses 244 et de vues de réponses 1.1m

Here's how card payments work, in a nutshell. Phrases highlighted in black are key entities and actions.

  1. There exists a marchand, who holds a compte marchand identified by a merchant ID (MID) with a bank (called an acquiring bank), who is offering a produit, for sale at some prix, that is listed on a website, that is operated by a marché (or the website could be operated by the merchant themselves if they have the technical knowhow. Also alternatively- the marketplace may hold a merchant account with the acquiring bank instead of the merchant).
  2. A acheteur, holding a credit/debit card issued by a bank (called an banque émettrice) and branded by some network scheme (such as Visa, Mastercard, American Express, etc) who wishes to buy this product they've discovered on this website initiates a checkout process by supplying some personal data (name, email, phone, shipping details, billing details, etc).
  3. The marketplace then initiates the creation of an le numéro de commande, at which point the price is determined and frozen. The marketplace presents a secure card form to the buyer where they can enter their card details.
  4. The card details are submitted to the marketplace or merchant's server (presuming the merchant follows card scheme compliances. Alternatively, the card details can be submitted directly to the payment gateway depending on how the integration is implemented). The merchant's server validates the card number for a "Luhn check" to ensure the cardholder did not mistype a digit. The card details are submitted to a passerelle de paiement.
  5. The payment gateway (or sometimes, the merchant/marketplace can also do this directly) enquires with the card network scheme's directory server (Visa Directory Server / Mastercard Directory Server) to check whether the issuer of the card and the card holder are enrolled under the 3D-secure (2-factor authentication) programme. The directory server uses the first 6 digits of the card to identify the issuer (this is called the BIN or ISIN number and is issued by the card networks when they are onboarding a new issuer) and determine their participation in the 3D secure programme. If the server discovers that the issuer is a participant, then the server responds to the gateway with a link to the issuer's access control server (ACS URL). This process is called enrolment verification.
  6. The gateway redirects the buyer's browser to this ACS URL along with some data derived from the card that's used by the issuer to identify the cardholder and also a termination URL (whose use you will come to in a bit). The page that the buyer sees now is the page that they enter the OTP on. The issuer sends the OTP to the phone number listed in their records for this buyer. The OTP is entered on this page and submitted to the issuer. The issuer checks whether the OTP entered is the same as the one sent and thus validates that the person in question is indeed the person who owns the card (since they have access to the registered phone number). The issuer then redirects the buyer to the termination URL we discussed earlier in this paragraph along with some data that indicates whether or not the buyer was authenticated. This step is called payer authentication. (Some issuers allow their users to use a memorized password instead of an OTP). The gateway (or merchant or marketplace) receives the authentication data from the previous step and is able to decide whether or not to proceed.
  7. If the gateway chooses to proceed, then the gateway submits the transaction to the network schemes for autorisation via a highly available and secure financial telecom network (Visa's is called VisaNet and Mastercard's is called BankNet) using the ISO 8583 protocol. The authorization request is routed to the card issuer who decides whether or not they can permit the cardholder's account to be debited with the amount requested (they may decline for any number of reasons- such as an insufficient balance, suspected fraud, etc). If the permission is granted, an autorisation is issued and sent back to the gateway. Note that the funds are not debited yet- but they are blocked on the cardholder's account and these funds cannot, in general, be used by the cardholder for any other purpose unless the authorization is captured or it expires (a annuler). The gateway then intimates the marketplace that permission has been granted and the marketplace or merchant confirm the order.
  8. Once the order is shipped (or otherwise fulfilled in whatever way appropriate by the merchant), the marketplace requests the gateway to capturer the authorization (this goes back through the financial telecom networks as earlier). The blocked funds are then debited at this time from the buyer's account.
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Steps 5 and 6 are optional for card processing in most of the world, but legally required in certain jurisdictions (such as India).

I've only covered this at a very high level and I've not gone into operational complexities, chargeback, settlement, PCI compliance, legal and regulatory compliance, etc. Also- each step I've explained above is much more complex than I've expressed.

Chloe Ward

Chloe Ward, Développement des affaires chez Ikajo International

Répondu il y a 13w · L'auteur dispose de réponses 400 et de vues de réponses 54.3k

Card payments are a bit more complex than they seem to be.

For understanding card payments comprehensively, it’s essential to explain what a passerelle de paiement est.

As we wrote in our article ‘How an online payment gateway works’, a payment gateway is ‘a software that enables the transfer of transaction data from the merchant to the acquiring bank.’ Thanks to this software, a direct communication between a merchant and an acquiring bank can be made possible.

As you could understand, a payment gateway moves the whole payment process forward, serving as a mediator between a credit card owner, a merchant, an issuing bank, and an acquiring bank.

Now let’s dig in deeper and look at what exactly happens after you click the ‘Order now’ button.

  1. Once you complete an order on the merchant’s website, the system redirects you to the payment form, where you enter your credit card details. After you fill out the necessary information, you click ‘Submit.’
  2. The merchant receives your credit card information. Afterwards, your credit card information along the order amount is transmitted to the payment gateway.
  3. Using payment card information, a payment gateway sends an authorization request to the acquiring bank. The authorization request is redirected to your IPS (Visa / MasterCard / etc.). Upon approval, it’s redirected to an issuing bank.
  4. If your card is 3DSecure, the system will redirect you to a page where you should enter the password.
  5. The system redirects the information from the IPS to the acquiring bank.
  6. Upon completion, a payment gateway sends a request to the acquiring bank and later to the IPS and the issuing bank to substract an order amount from customer’s cart.
  7. If there are sufficient funds on card owner’s balance, the issuing bank sends confirmation of the transaction to IPS.
  8. IPS gives its confirmation.
  9. In about 15 minutes after the authorization, a merchant finds out that a transaction is successful.

Comme vous pouvez le voir, card payments are very complicated, even though they usually take up to 10 seconds.

If you want to delve deeper into the world of payment processing, the materials below may be useful as well:

'Quelle est la différence entre une passerelle de paiement, un processeur de paiement et un compte marchand?

'Comment fonctionne une passerelle de paiement en ligne

J'espère que j'ai aidé!

Sandra Wróbel-Konior

Sandra Wróbel-Konior, Directeur du marketing de contenu chez SecurionPay

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Mise à jour il y a 56w · L'auteur dispose de réponses 513 et de vues de réponses 403.1k

Great answers so far, so I’ll just add the online payment scheme in the simplest way possible.

In 2014, the number of cards with a payment function increased to 766 million in the EU and the number of card transactions was 47.5 billion, with a total value of 2.4 trillion dollars. This shows how popular is using cards to pay.

How online payment works?

To start accepting card payments on a website, a business owner needs a merchant account and a passerelle de paiement (and the ready-made website, of course).

Let’s start with a compte marchand. It’s a special bank account where the funds captured from card sales are held before transferring to a regular bank account. Which means that when a customer finishes their purchase, the payment is not immediately transferred to the merchant.

Once a merchant has a merchant account, it’s time to implement passerelle de paiement sur leur site web.

The gateway takes all the credit card details that customers enter on a website and transfers it to the processor to get the funds released to the merchant account. In short, the payment gateway connects merchant’s website to the payment processor. It authorizes cards and electronic payments by encrypting the sensitive data. That’s how the customer’s money gets into a merchant account.

To be a little bit more precise, let’s dig deeper into the process:

After a customer submits a payment, it needs to be authenticated to eliminate fraud. There is also an authorization which comes with a request from the processeur de paiement au banque émettrice to authorize the amount. The issuer checks if a customer has enough money to make the purchase. Then, they send back the information to the payment processor (approval or decline).

If everything’s fine, the issuing bank sends the funds to a merchant’s acquiring bank (a banking partner for business). The next step is depositing the funds by the acquirer into your merchant account (it could take a few days).

Here’s a short version of what’s behind the ‘Pay’ button to make it easy to you to understand how card payments work.

How do card payments work?

Making a payment in a physical store by card comes with backend process similar to an online payment process. The data is transferred through a payment gateway, then the payment processor or acquirer processes the data and communicates with the issuing bank to make sure the transaction can be completed. When the payment is authorized, the transaction can be completed successfully.

Here’s also a short video that shows how authorization and capture work: Authorization and capture.

Hope this helps!

Katherine Pensatori

Katherine Pensatori, Chef de produit UniPay Gateway chez United Thinkers

Mise à jour il y a 192w · L'auteur dispose de réponses 996 et de vues de réponses 664k

There are two processes authorization and settlement. Payment information is captured from a cardholder, it can happen online, through web form or through payment terminal. Then it is sent through acquiring bank to the appropriate association (Visa, MasterCard, Amex or Discover) which then verifies through the issuing bank the reliability of the fund, usually settlement is processed till the end of the day, the issuing bank modifies the acquiring bank that money transfer has to occur and the transfer of funds is executed in between respective banks using interbank ACH transaction.

Generally speaking, somebody who wants to accept payment cards applies for a merchant account with a particular acquirer, integrates one way or the other into their system. And then when cardholder wants to buy something the information is captured from cardholder, sent to the acquirer, checked, eventually settled and finally as the settlement processed, money is transferred from the bank of the cardholder to the bank of the merchant.

Alejandro Guízar

Alejandro Guízar, CEO and Founder,

Répondu il y a 192w

Card payments are very complex regarding business rules, issuer rules, acquirer rules and regulations. However, every card payment process has 2 stages (as told by Katherine Pensatori).

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The first stage is the one every merchant and cardholder has been seeing during his transactions and is very simple. The first step is getting the card information either from the embossed data, the magnetic stripe or the chip included in it. After that, the information should be secured through encryption and sent to the payment processor (either a bank, gateway or payment facilitator). The next step is to find the card issuer, it can involve one entity (card payments Us On Us) or a large number of hops (i.e. international payments). When the card and transaction data reaches the issuer, the last one is now responsible of verifying the information to certify that the transaction is natural within the cardholder's historic behavior, hasn't been marked as lost or stolen and if that kind of transaction (e-commerce, magstripe, hour, type of purchase, etc) is allowed to him/her.
After all this information is verified the response is returned to the cardholder either through a POS, webpage, etc.

Settlement is very easy, is nothing but the banks telling each other how much money they have to pay for their cardholders purchases. There are 2 types of settlement available in the industry: batch and online. The batch settlement is getting outdated because of the connectivity most POS have nowadays. The online settlement will be the most used process in the future, allowing banks or financial entities to transfer funds almost immediately after the transaction has been completed.

Ian Wright

Ian Wright, Analyste financier

Répondu il y a 2d

Before knowing about the process of card payments. I would let you know the key players of card payment:-

1. Cardholder.

2. Merchant.

3. Merchant Bank.

4. Issuing Bank.

5. Card Association such as Visa or Mastercard.

All of these plays an important role in card payments. Simply a person to insert a card in the card machine. After that issuer has to enter the pin. A requested amount is credited to the merchant account after authentication.

Ralph Kirschner

Ralph Kirschner

Répondu il y a 67w

Paiements par carte has became the easiest way for the payment. In my opinion it is the most secured way to do the payments. When we do the card payment then we get one OTP that is one time password in our registered mobile number so that no one can use the password or misuse it if also takes the card. I probably tries to do card payments so that my money and my transaction stays secured.

How do card payments work?

Sagar Warghade

Sagar Warghade, works at Ola

Répondu il y a 73w

How do card payments work?

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