How e-Commerce Transactions Work
Additional Parties involved for Card not Present Transactions
Electronic Commerce or "E-Commerce" Merchant is an authorized acceptor of Visa or MasterCard cards for the electronic (online) payment for goods and services using an Internet website.
Processor can route an electronic transaction through the payment network for authorization, clearing and settlement on behalf of the Merchant Bank/Acquirer.
Payment Gateway is a service that handles encrypted transaction data and enables an e-commerce merchant to connect to the Acquirer (or its merchant processor) to complete a bankcard transaction in real-time. An example of a popular Payment Gateway company is Authorize.Net.
The Authorization Process
- Cardholder presents credit card for payment.
- Merchant swipes card, enters dollar amount, and transmits an authorization request to merchant bank (i.e. Elavon)
- Payment Gateway receives the encrypted information from the server; formats & transmits it to Merchant Bank or its Processor (i.e. Elavon).
- Merchant Bank electronically sends the authorization request to the cardholder's Issuer.
- INET or VisaNet routes the request to the cardholder's Issuer.
- Issuer approves or declines the transaction.
- INET or VisaNet forwards the Issuer's response to the merchant bank.
- Merchant Bank forwards the Issuer's response to the merchant.
- Merchant receives the authorization response with a six digit approval code; completes the transaction accordingly.
The Authorization Process
- Cardholder presents credit card for payment.
- Merchant swipes card, enters dollar amount, and transmits an authorization request to merchant bank (i.e. Elavon)
- Payment Gateway receives the encrypted information from the server; formats & transmits it to Merchant Bank or its Processor (i.e. Elavon).
- Merchant Bank electronically sends the authorization request to the cardholder's Issuer.
- INET or VisaNet routes the request to the cardholder's Issuer.
- Issuer approves or declines the transaction.
- INET or VisaNet forwards the Issuer's response to the merchant bank.
- Merchant Bank forwards the Issuer's response to the merchant.
- Merchant receives the authorization response with a six digit approval code; completes the transaction accordingly.