What is Online Payment?
Online payments are the electronic transfer of money between buyers and sellers.
The electronic exchange of currency via the internet is referred to as online payments. In exchange for goods or services, these payments typically consist of the transfer of monetary funds from a customer’s bank or debit or credit card account to the seller’s bank account. These funds can be drawn directly from a customer’s credit card or checking account, or from an online payment system linked to the bank accounts of both the buyer and seller.
Buyers of goods and services, as well as sellers of those goods and services, use online payments. When funds are transferred and received, several steps occur, particularly between the two parties, that frequently necessitate the use of different types of software to successfully complete the transaction. The typical steps are as follows:
- A purchase is made online: To pay for goods or services, a customer (buyer) provides the necessary information (debit or credit card, checking account information, etc.). This information is then routed to payment processing software or a payment gateway.
- Payment details, such as the customer’s name, address, and bank account information, are encrypted: The payment gateway encrypts payment details, such as the customer’s name, address, and bank account information, providing a level of security that makes it more difficult for this information to be stolen.
- Details have been confirmed: After the transaction data has been encrypted, it is sent to a payment processor to ensure the transaction’s validity. Once the transfer has been verified, the information is sent to the buyer’s and seller’s banks.
- Funding has been approved: Assuming no red flags are raised by the payment gateway or processor, the banks approve the transaction. However, there are several reasons why a transaction may not be approved by either bank:
- Inadequate funding
- Account status is “frozen.”
- Invalid credit card number or date of expiration
- Transaction restrictions
- The card has been reported stolen or lost.
- Invalid Card Code Verification The address does not match the card (CCV)
- The following funds are requested: Following approval of the funds and corresponding transfer, the payment processor requests that the funds be transferred from the buyer’s source of funds to the seller’s bank account.
- The seller receives the following funds: The funds transfer has been completed, and the purchase price has been transferred from buyer to seller.