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swabha edited this page Mar 14, 2018 · 1 revision

Steps in Payment

  1. Authorization: is the process of confirming whether your customer's credit card has sufficient credit to purchase goods or services from merchant, and also confirms whether the card is valid. You can obtain authorizations through a credit card machine, ecommerce web site or over the phone.

    Steps:

    1. Swipe the card/ send credit card information.
    2. Information is sent over the wire usually tokenized.
    3. Send the card information to the issuing bank (Usually this is sent in batches so the company issuing the card is taking a risk)
    4. The issuer will approve the transaction and send response to the bank
    5. This inforamtion is sent to the merchant.
    6. The transaction is approved. The purchase is complete

    Approval: An approval means that the dollar amount you specified will be reserved from the cardholder's available credit limit for future settlement.

    Decline: A decline means that the customer's card cannot be used to complete the purchase.

    Note: There are many place that we could lose connection and or power as a result the failure should be handeled gracefully; with error and the transaction should be retried and the current one cancelled.

  2. Settlement: is the process of managing electronic payment transactions so they can clear and be funded. To make this happen, you, as the merchant, must present approved card transactions to Chase. We then submit those approved transactions to the payment brands for clearing through interchange. You may hear these transactions referred to as "deposit" transactions.

  3. Funding: deposits money into your bank account to compensate you for transactions processed — is really an extension of settlement, and sometimes the terms "settlement" and "funding" are used interchangeably.

  4. Void: A transaction is cancelled before the purchase is completed; not money has been moved.

  5. Refund: When a purchase is complete and a refund is requested.

  6. Chargeback: The money need s to be returned to the customer

Players in Payment

  1. Acquirer
  2. Card Issuer: Usually a financial institution, bank, or credit union, the card issuer provides the credit or debit card to the consumer on behalf of the card brand networks (see below). The issuer is responsible for approving or declining the transaction request, based on the customer’s predetermined line of credit. (Note that Discover and American Express are the exceptions– they act as both the card network and the issuing bank.)
  3. Card Brand Network: The card brand network acts as the intermediary between an acquirer (or processor) and an issuer. There are two types of card networks: credit card associations that include Visa, MasterCard, Discover, Amex, etc., and PIN-less debit card networks that include NYCE, PULSE, Maestro, Interlink, Cirrus, etc.
  4. Payment processor: A payment processor acts as the mediator between merchants and the financial institutions involved in processing a payment transaction. Processors handle the entire payment transaction, from authorization to settlement, to ensure merchants get paid. They facilitate the transfer of funds from customers’ accounts to merchants’ accounts. Payment processors can be banks or non-banks, and can have their own sales force, or work with ISOs (see below) to acquire merchant customers. Payment processors vary widely in their offerings. Some offer just the basics, while others provide comprehensive consultation and support services.
  5. Independent Sales Organization(ISO): An ISO is a third-party company that an acquirer contracts with to procure new merchant relationships. ISOs resell products and services from one or more payment processors, and typically receive commission from the processors for which they sign up merchants.
  6. Issuing Bank: Issuing banks and acquiring banks work closely together in a payment transaction. As mentioned above, the issuing bank issues credit or debit cards to consumers. The acquiring bank, also known as a merchant bank or acquirer, processes credit and debit payments on behalf of a merchant. A merchant enters into a contract with the acquiring bank in the form of a merchant account. The acquiring bank exchanges funds with the issuing banks and ensures the merchant receives payment for payment card activity, minus interchange and other fees. Many acquiring banks use large third-party payment processors to facilitate the transactions behind the scenes.
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Testing should be around

  1. Amoutn of money that was authorized. it should match the one that is charged

  2. Location of money autherized and withdrawn should be same.

  3. Work of refund of item.

  4. Display the itemized bill including State Tax; Sales Tax; Recycling Fee if any …etc.

  5. PCI compliance

    1. Use tokenization while sending the payment information over the network

  6. HIPPA compliance

  7. Charge is hit twice. => Should cancel one charge on its own if the parameters are the same

    1. Address
    2. Store
    3. Credit card
    4. time stamp is really close
    5. Amount

  8. Handeling a refund:

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