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Published in Economy & Finance , Business
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  • 1. Payment
  • 2. A key component to conducting business is accepting payment. At a high level, payment seems very simple: A buyer receives some type of value from the product or service purchased, and in return, the seller receives some from of payment.
  • 3. Bricks and Mortar
  • 4. Type of Payments
    The simplest form of payment
    Cash Fees
  • 5. 2. Credit Cards
    Another popular form of payment. Credit cards, in additional to the convenience of not having to handle cash, allow consumers to extend their purchasing power. As a result, these cards are often used for larger purchases, where the consumer may not have enough cash on hand to complete the transaction.
  • 6. E-commerce
    ( do not require the physical transfer of payment
    but involve only data transfer )
  • 7.
  • 8.
  • 9. Step 1: A customer is making a purchase at
    an online shop.
    They are prompted to enter their credit card details on a secure page.  
  • 10. Step 2: The online shop sends the transaction
    message to the payment gateway.
    The Payment Gateway performs validation on the transaction
    To confirm the required information is present and
    is in the correct format
  • 11. Step 3: The payment gateway sends the
    transaction message to the bank.
    In online payments terminology this bank is known as the Acquiring Bank.  
    They carry out various checks on the Transaction Message to ensure it is
    valid and that the transaction is not fraudulent. The Acquiring Bank 
    determines who the Card Issuer is. The Transaction Message is
    converted into the message format required by the Card Issuer.
  • 12. Step 4: The acquiring bank sends the
    transaction to the card issuer.
    The Card Issuer validates the information and confirms there is
    sufficient funds available. The Card Issuer decides to
    approve or decline the transaction.
  • 13. Step 5: The card issuer sends the response
    message to the acquiring bank.
    The Acquiring Bank validates the information contained
    within the response message.  They update their systems
    with the transaction result.
  • 14. Step 6: The acquiring bank sends the response
    message to the payment gateway
    The Payment Gateway validates the response information
    and then updates their system with the result.
  • 15. Step 7: The payment gateway sends the
    response message to the online shop.
    The Online Shop verifies that the response message came from the Payment Gateway.They validate the contents of the response to confirm the information is correct. They save the result of the transaction in their system.  Based on the transaction result the Online Shop determines which page to present to the user.
  • 16. Step 8: The online shop displays the result of
    thecustomers online payment transaction.
    This is the final step in the authorisation process.
    This process typically takes less than 5 seconds
    end-to-end to complete.