Payment processing is an important element of any business that accepts payment transactions from clients. Payment processing services strive to provide businesses with seamless payment systems to improve customer care. Transactions that are carried out through bank cards, electronic digital transfers, and other types of non-cash payments enter the payment processing system. Companies specializing in online payment processing, such as Fondy, provide entrepreneurs with the opportunity to accept bank card payments from their customers on the website, online store, marketplace, mobile application, etc.
What is payment processing?
Payment processing is a series of operations through which money transactions pass from the client to the enterprise. This process is simple at first glance, but before the transaction is successfully completed in the system, several steps are taken for the company to receive a cashless payment from the buyer. Operations such as authorization, transaction verification, financing, and settlement of funds are carried out during payment processing. Different parties are involved in payment processing:
- The buyer: the person who pays for the service.
- The enterprise: entity receiving payment.
- The payment processor: a purveyor that handles payment transactions between buyer and enterprise.
- The bank: an entity that holds the customer’s funds and approves or rejects the transaction.
- The acquiring bank: the bank processing the payment transaction.
- And other parties depending on the payment method.
How does payment processing work?
The process when a client makes a cashless payment and the enterprise receives it directly to their bank account includes four main stages. A monetary transaction takes only a few seconds, although the process is quite complex and multi-stage. Thus, payment processing works step by step:
- Authorization. When a customer makes a payment, the system contacts the bank and requests authorization for the money order.
- Transaction verification. At this stage, the authenticity of the card and all information about it are verified.
- Financing. After the remittance is verified and approved, it proceeds to the financing stage, when the money is debited from the client’s account.
- Settlement of funds. At the last stage, the payment system transfers funds to the company’s account.
The payment process may differ depending on the payment method and the parties involved. The payment processor plays a significant role in this process. They act as intermediaries between the buyer, the enterprise, and the acquiring bank, making them an important part of the financial industry.
Who is a payment processor?
A payment processor is a purveyor that gives companies the opportunity to get, move, and manage cashless payments from clients. The payment processor confirms the payment information and releases the cash to the tradesman after the sale is completed. Top payment service providers like Fondy offer businesses the best way to seamlessly move and manage funds. To find detailed instructions on payment processing and how to accept payments in your business, go here to the comprehensive guide prepared by Fondy.
