A lot goes on behind the scenes to make online payments possible. When a buyer provides his card details on a checkout page or swipes his card at a POS terminal, certain protocols must be carefully followed for the transaction to be completed. A payment processor is a financial provider that coordinates and acts as an intermediary between the various financial parties involved in a transaction to process and settle online payments. If you wish to offer your customers seamless electronic payments, having a trusted payment processing service is crucial. To better understand the work of a payment processor, here’s a breakdown of the process involved in online payment processing.
How does the online payment process work?
The online payment process begins when a buyer attempts to make a payment via any electronic payment method of his choice, whether through a mobile wallet, card payment or an electronic bank transfer. This process is completed when the transaction sum has been debited from the buyer’s bank account and deposited into the merchants. To facilitate this process, an online processor receives and sends information between the different parties involved, in every stage of the transaction.
Stage 1: Card Authorisation
- The first step of the online payment process begins with verifying the details provided at the payment point by the customer. The information is received by a payment gateway, encrypted and sent via a payment processor to the card network used by the customer (e.g. VISA).
- The card network is responsible for verifying the identity of the user and communicating with the customer’s bank (also known as the issuing bank) to confirm that sufficient funds are available for the transaction.
- The issuing bank approves the transaction if sufficient funds are available and no suspicious activity is detected. If the opposite is the case the bank sends a ‘declined’ message back to the payment processor.
- The payment processor sends the approval or decline message to the customer via the checkout page or POS terminal.
Stage 2: Settlement
- In this stage, the payment processor ensures that the funds are transferred from the issuing back to the merchant’s bank also known as the (acquiring bank).
- Once the transaction has been approved by the issuing bank, the payment processor sends this information to the acquiring bank.
- The acquiring bank then forwards this to the credit card network which notifies the issuing bank to make the appropriate funds transfer.
- The fund is then deposited into the merchant’s bank account by their bank.
Why you Should Consider a Payment Processing Service
An online payment processor gives your business the right infrastructure to seamlessly accept various forms of electronic payment. Here are some reasons to consider setting up a payment processing service for your business:
- Improve the point-of-sale experience for customers by offering them a convenient cashless payment option.
- Boost your sales by accepting various payment methods including credit cards, debit cards, bank transfers, QR codes, digital wallets and more.
- Take advantage of the reporting features of your payment processor to reconcile all your transactions.
The Best Payment Processing Companies in Nigeria & Kenya
Some popular payment processing companies in Nigeria and Kenya include Interswitch, eTranzact, Remita, etc. However, one of the newest and most innovative payment companies today is Tingg. Tingg is a payment platform that is revolutionising payment processing by helping businesses in Nigeria and Kenya accept various forms of electronic payment without the need for a website or a POS.
Simplify your online payment process with Tingg
Empower your business to accept online payments with ease! Whether your company operates offline or online, Tingg has a payment solution for you. We offer a wide range of payment solutions to suit all sizes of businesses. Visit tingg.africa today to get started.