By Fernanda Mathias
From the customer’s standpoint, a digital payment is instant. The front-end is simple. However, what merchants should understand is that there are other integral parts of the payment journey.
There are a few steps and parties engaged in a digital payment transaction. Acquiring banks, payment gateways and issuing banks are examples of those involved during the payment operation.
As a merchant seeking new payment processing alternatives, it is vital to know and understand them to make proper choices for your business.
What is an acquiring bank?
An acquiring bank is a financial organisation responsible for processing credit and debit card payments for the merchant and the underwriting process.
If you want to process online payments, you need a contract with an acquiring bank; otherwise, you will not receive payments.
What is a payment gateway?
As the name suggests, a payment gateway is a virtual gate where a transaction goes through before continuing the payment process. It is a service that allows credit and debit card payments for online businesses.
An online company needs the acquiring bank to help process payments and the payment gateway to accept credit and debit card payment besides alternative payment options.
Here’s a typical payment transaction:
- The customer makes a purchase and enters credit card details such as the cardholder’s name, expiration date and CVV number.
- The payment gateway encrypts the card details and executes fraud checks before sending the card data to the acquiring bank.
- The acquiring bank sends that verified information to the card scheme, such as Visa and MasterCard.
- The card scheme does a new layer of fraud check and sends the payment information to the issuing bank, which will authorise the transaction.
- The approved or denied message is transmitted to the acquirer, who sends it back to the payment gateway, who then sends it to the merchant.
This operation takes place within seconds, and if the payment is approved, the acquirer collects the payment amount from the issuing bank and holds the funds in your merchant account.
Choose wisely to achieve success
Both acquiring banks and the payment gateway are essential parts of the digital payment operation. — As a merchant who wants to process online payments and accept various payment options beyond credit and debit cards, you must find the most suitable alternative for your business, like iPayTotal.
At iPayTotal, we help you obtain a high-risk merchant account, providing customised solutions for credit card processing.
Whether you are an experienced merchant or a new one, our team works hard to find options that suit your needs and match the right acquiring bank. Our support team is also available 24/7 to answer any questions you may have and guide you from day one.
Reliable and experienced payment service providers, such as iPayTotal, can help you find the best merchant account solution to start processing payments with an easy and fast application process.
Contact us today at iPayTotal and find out more about our services.