Whiteboard Wednesday #1: How online transactions work | Clearhaus Learning

Today Paul Barclay is talking about what happens behind the scenes when a customer makes an online payment with his credit or debit card - and what the role of an acquirer is. It’s important to understand how this works, so that you can make well-informed decision when choosing your vendors and also when you’re managing your online payments.

Hi. Welcome to Whiteboard Wednesday. I’m here to give you behind the scenes look of how a transaction works for your webshop, your mobile store or e-commerce site and the various stakeholders involved.

So this is your website, your mobile store and obviously the most important thing is for you to sell and get the cardholders and the consumers buying off of your store in a seamless manner.

So what happens with the various stakeholders and who are involved. So, your merchants store is connected to an acquirer via a gateway. The transaction when the consumer comes on and buys the goods and services from your store, your cashier will show and the cardholder or the consumer will input those transactions and press ‘buy’.

When he presses ‘buy’ the transaction goes through the gateway or payment service provider to the acquirer. The acquirer, who’s a member of Visa or MasterCard or a card scheme, will process the transaction up to Visa or MasterCard, then ultimately up to the issuer or the credit card of the cardholder for authorization, saying he’s got enough money and the card isn’t stolen.

The authorization will quickly come back to the acquirer and the merchant will know ‘yes’ or ’no’ to sell those goods and services. The acquirer, who holds the money from the issuer, and as and when in the terms of the agreement will settle the money to the merchant’s bank account, i.e. you, so you’ve received your money for the goods and services that you’ve sold. I hope that helps and happy to help give you some advice on the transaction.

Thank you.