How it Works

Payment Processor

How it works:

The customer initiates the transaction at a point-of-sale (POS) system or terminal. The merchant bank obtains information from the payment card (a credit card or debit card), digital wallet, or similar payment methods and forwards it to the payment gateway solution. It also uses tokenization and encryption to safeguard card numbers and similar sensitive data before transferring it to the issuing bank of the card for payment processing.

Once the payment processor (often under the control of the card issuer) receives the request and card data, it goes through a series of authorizations and security measures. Those confirm whether the transaction details from the source match the destination account (merchant account) details.

The payment processor also verifies the bank account balance or available credit line before authorizing or declining the transaction. If the processor approves the transaction, the acquiring bank will receive the approval to release or accept funds for the transaction. While relying on a payment gateway service created by another company can provide that functionality, that doesn’t make it ideal for managing debit or credit card payments (or other digital payments). When you make a payment system from scratch, you’ll have more control over how it works and the features you can integrate, allowing you to have the ideal payment platform for your specific needs."