Ever wondered what happens behind the scenes to your money after you’ve pressed ‘submit’ on an online order? While the whole process usually takes next to no time on screen, there’s a lot of work going on in the background in those few seconds, looking after your funds and making sure your money ends up in the right place.
The order process takes place on a secure server, making sure that no one else can read your information during and after submission. It’s essential to protect your hard earned money – to that end checks are carried out to verify that the card and the charge are valid. Once you’ve submitted your card details and information into the website, the ‘payment gateway’ takes over. This service handles the back-end communications of the transaction; it contacts the bank, reports back on the results and moves the money.
This only takes only a few seconds and begins by checking that the card number is valid. To decrease the possibility of fraud, it may also check to make sure that the address, name or CSV code match. Other tools for fraud detection that may be used includes 3-D Secure, bin blocking, card blocking, transaction caps, volume limits and fraud scoring.
How it begins
To start, the payment gateway formats the data and passes it to the merchant bank’s processor. The payment gateway protects card details by encrypting sensitive information for transit.
The merchant bank’s processor allows the gateway to enable your transactions to be authorised by checking you actually have sufficient funds; it submits the details to the credit card network, which routes the transaction to the card issuer (your bank). The issuing bank will then approve or decline the transaction and pass its results back to the credit card interchange. The interchange then sends the results back to the merchant bank’s processor, which in turn relays it to the payment gateway.
If a payment is rejected, the gateway sends word back to the website so that the vendor can notify you. If all goes smoothly then the process will carry on to its next stage.
Depositing the money
When the payment is accepted, money is routed by the payment gateway into the merchant account.
A merchant account is a special type of bank account, different to a business account, which allows the vendor to accept payment cards like Visa, Mastercard etc. All this account does is hold the payment, but a website can’t accept card transactions without one. Typically, the merchant account is a separate company to the payment gateway, although some payment solutions offer both.
Once payment is successful you, the visitor, will be notified that the payment went through, and the transaction will be viewable in the reporting tools for the shop owner. The confirmation screen shows everything has gone through successfully and your money will be deposited into the merchant account.
It’s fairly incredible to think that all this happens in just a few moments. While you watch that progress bar your virtual money is being cleverly checked, authenticated and transferred, allowing you to shop at an online store based anywhere in the world, all from the comfort of your sofa, office or even on the go. So next time it takes a second or two to authenticate, just remember everything that’s frantically going on behind the scenes.