What is processing and how does it work

payment processor

For the average user, electronic payments are a simple and straightforward process.

However, behind this seemingly simple process of selecting a payment option, entering data. And the payment itself there is a chain of complex interconnected processes.

So how does the payment connection on the site actually happen, what processes take place in seconds of payment processing, and what is behind the word “processing”?

What does a business need a payment processor for

The payment processor is responsible for processing payments made on the site. In short, a payment processor is an intermediary between the parties involved in the online payment process.

Choosing a payment gateway is a business privilege. You can choose an intermediary that will process electronic payments and start accepting not only cards for payments on the website but also offer customers alternative payment options, such as cryptocurrency.

In this case, the business gets not only the ability to accept payments on the site but a full set of services, according to the existing needs.

The payment processor provides the business with software that is installed on the site. The software not only performs payment processing but also saves and analyzes transactions.

Differences between a payment gateway and a payment processor

The payment processor chosen by the business takes care of processing online payments. However, the payment gateway performs the transactions. It is the payment gateway that is responsible for evaluating the received data and further transmission.

Gateway is a service, the main task of which is to provide conditions for online payment by all available methods. Without a gateway, online payment is impossible.

The client starts interacting with the payment gateway at the final stage of working with the order when the payment data input window (the gateway page) appears in front of him. It receives the entered data from the client, encrypts it, and transmits it further.

The next stage of working with the payment is receiving confirmation by the gateway. The payment conditions are checked. At this stage, the payment is either approved or rejected.

What are the intermediaries you can’t do without

The online payment process is impossible without another element – the processing center. The service that serves online payments from cards is the link between the commercial online venue and the acquiring bank.

The very possibility of processing payments by cards or Internet acquiring appears only when connected to the processing center.

The procedure of payment processing from the site, as a result of which funds are transferred from the buyer’s account to the merchant’s account through the payment gateway – this is Internet acquiring.

Choosing to connect a processing center is one of the most successful solutions for accepting bank card payments on your site.

The center will do all the work for you, namely, it will be engaged in directing and tracking payments between you, the buyer, and the banks.

How are online payments processed

If we are talking about payments by plastic cards of banks, in this case, the processing can take place not only through the bank account but also through a third-party payment processor.

Current account and payment gateway

A business can use an account for only one purpose: to accept debit or credit card transactions. This process is not possible without a payment gateway that allows the customer to enter card data.

Third-party payment processor

A good payment service provider will enable a business to accept card payments without linking it to a checking account. However, the aggregator’s services have to be paid for. Usually, there is a fixed fee.

Payment processing: how does it work

For the customer, the process is simple enough: he only has to enter the payment data and click “OK” to make the payment go to the merchant.

From the seller’s side, this process is no more complicated, provided that everything is set up perfectly.

The seller can only see the information about the payment confirmation, the processes that the system carried out to make the payment are hidden from prying eyes.

It should be understood that the processing involves not only the seller and the buyer, but also the bank that issued the buyer’s card (the issuer), the bank that receives payment from the buyer (acquirer), the intermediary that coordinates the processes (processing center) and the international payment system (IPS).

For processing to take place, it is necessary to confirm the solvency of the buyer.

This is one of the functions of processing: to get in touch with the issuer and request data about the buyer’s account in order to find out if the amount of money needed for the purchase is on the balance.

With a positive response from the issuer, the funds transfer process starts: they are frozen and deducted from the buyer’s account and then appear on the seller’s account.

At the same time, the payment system and acquirer fees are deducted during the funds transfer process. Information about the seller’s income is transmitted to the fiscal authority.

This process is quite comfortable, as everything is automatic and does not require additional action.

Transactions can be performed continuously, regardless of the day of the week, and without reference to geography. Internet connection is an important prerequisite for processing.

Principles of the processing center

The payment processing itself takes no more than a few seconds. However, in these seconds it happens:

  • Payment by the buyer for the selected product or service on the site. Payment data goes to the processing center.
  • Verification of incoming data. Any provider has systems in place to protect not only the provider but also customers from fraudsters. If this system classifies the payment as safe, the data will go to the acquirer and the merchant will be notified of the successful payment. If the system classifies the payment as fraudulent, the transaction is blocked and the card from which the payment was made is blacklisted.
  • Request for data from the issuing bank through the international payment system (IPS) by the acquiring bank that received the transaction data.
  • Checking the status of the buyer’s account by the account servicing bank and informing the MPS and acquirer about the results.
  • Sending a response from the issuer to the processing center. Along with the response from the issuer, the center receives either a confirmation code or information about the rejection of the transaction.
  • The processing center notifies the merchant of the payment status.
  • Receipt of a successful payment message by the merchant.

How much does it cost to connect the payment to the site

When planning to connect the payment option to the site, you should be prepared to have to pay: a payment system fee, bank and aggregator fees, and possible unforeseen expenses.

Let’s break down each type of expenses:

Payment system fee

The fee can be affected by the number of incoming payments, turnover volume, frequency of payments, use of anti-fraud, etc.

Payment aggregator fee

This is a necessary fee for the service, which falls entirely on the merchant’s shoulders.

The amount of the fee may vary and depends on the size of the business.
Small businesses characterized by constant changes in the number of transactions are more often offered a minimal, but fixed fee.

Unforeseen expenses

You may need additional services that you will have to pay for.

Is it possible to provide profitable payment processing

The interest rate for processing is a condition that can always be changed in your favor. However, you will need to prove to the intermediary company that your business is large, profitable, or growing rapidly.

The more transactions, the lower the percentage of commission you have to pay.

Alias, there are no other options for reducing the commission. Why not? Because the process of accepting payments on the site is complicated and requires not only the involvement of a large number of technical resources but also the organization of their work.

The reputation of your business is also important because acquiring companies cannot offer the same conditions to everyone, working at a loss.

It is worth understanding that the acquirer must meet strict requirements and constantly undergo inspections, so the company has the right to demand this from its customers as well.

How do I connect the processing

To get approval to open an account, the seller will need:

  • Provide a functioning site with a stable operation of the necessary options to make secure payments.
  • Confirm the compliance of the site with the requirements of Visa and Mastercard.
  • Place the necessary information about the activities of your legal entity on the site.
  • Guarantee the safety of visitors by running the site on the HTTPS protocol.
  • Confirm the compliance of the business with the requirements of current national and global legislation.

Connecting processing is not difficult. In most cases, the intermediary company will offer integration assistance options.

This can be an option of interacting with the support service, as well as video tutorials, etc.

There are several ways to connect processing: through API or a plugin for WordPress, as well as the easiest way – using a module for the CMS site. We recommend reading the article “Payment automation on the site“.


Online payment processing is an ideal solution for online businesses with a complex structure and a high degree of security.

All you need to do is to choose the right intermediary that will help you to organize really reliable and secure payments on your site.

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