{"id":6231,"date":"2017-07-24T17:41:23","date_gmt":"2017-07-24T17:41:23","guid":{"rendered":"https:\/\/www.instamojo.com\/blog\/?p=6231"},"modified":"2021-07-06T16:10:14","modified_gmt":"2021-07-06T10:40:14","slug":"online-card-payments-work-debit-credit","status":"publish","type":"post","link":"https:\/\/www.instamojo.com\/blog\/online-card-payments-work-debit-credit\/","title":{"rendered":"How Online Card Payments Work"},"content":{"rendered":"

Online card payment has many benefits including convenience, easy tracking and security. When merchants use a payment gateway, they can accept all major credit card brands on their website, mobile device or retail store.<\/p>\n

If you are an online business that collects payments via Debit or Credit Cards online, here is everything you need to know about how online card payments work.<\/p>\n

\"how
*IC = Interchange Networks are payment processors like VISA, MasterCard and, AMEX.<\/figcaption><\/figure>\n

Sometimes, the flow is disrupted and the payment fails.<\/b><\/p>\n

There are several reasons why payments fail but they can broadly be categorized under two problems:<\/span><\/p>\n

    \n
  1. Payment Authentication failure<\/span><\/li>\n
  2. Payment Authorization failure<\/span><\/li>\n<\/ol>\n

    While both these terms are often used interchangeably, they are two completely different things.<\/p>\n

    What is Payment Authentication?<\/b><\/h2>\n

    Online payments go through several checks before they can be processed. This is to help prevent fraud<\/a><\/span> and chargebacks<\/a><\/span>.<\/span><\/p>\n

    While making a payment, the customer has to produce identification parameters that verify the customer alone is making the payment. <\/span><\/p>\n

    Identification parameters\/ authentication factors include three crucial elements:<\/span><\/p>\n

    Knowledge Factors<\/b>: Something a user knows – PIN number, answers to security questions, etc.<\/span><\/p>\n

    Possession Factors<\/b>: Something a user has – a credit or debit card, an OTP, etc.<\/span><\/p>\n

    Inherence Factors<\/b>: Something a user is – human factors like fingerprints, retina scans, etc (biometrics).<\/span><\/p>\n

    For Indian cards, the user has to produce two of the above factors to authenticate a payment. If any of the factors don\u2019t match with the records in the bank\u2019s database, the payment is rejected. Which means, the transaction fails.<\/span><\/p>\n

    What is Payment Authorization?<\/b><\/h2>\n

    When your customers are buying something from your online store they enter their credit card numbers during the checkout process. Your e-commerce website sends that credit card information to your payment gateway to authorize the transaction and process the payment. This is Authorization.<\/span><\/p>\n

    Once the payment has been authenticated, it is sent to the Interchange network.\u00a0Then, it forwards the payment request to the issuing bank\/user\u2019s bank for permission to debit the money. Here, the bank conducts multiple checks.<\/p>\n

    While authorizing a payment, the bank checks:<\/span><\/p>\n