The ecommerce industry is growing by each passing day and has created a number of opportunities for the growth of online businesses. An online payment refers to the transaction of money and goods in any possible form by using the online media. The processing of transaction made by a credit card goes through a simple process and is completed in a matter of seconds. Following are the steps that take place when an online transaction is made –

  1. The consumer selects the product or service that he/she wants to purchase from a trader’s website after which these items are put in a cart.
  2. The consumer then selects the payment mode which accepts credit cards.
  3. The web browser then redirects the consumer to a form for secure payment by connecting to one of the secure servers.
  4. The consumer enters the details in the form after which the secure server accepts the credit card information. The transaction is authorised before it is complete.
  5. The transaction is sent to the trader’s processing bank from the secure server. At the trader’s processing bank, checks are carried out to validate the card, check for availability of funds after which the transaction is approved. After this, the processor will receive an authorisation code.
  6. The encryption of this authorisation code is carried out by payment gateways and then transmitted to the merchant’s web server which sends a conformation receipt to the consumer’s browser.
  7. The amount is then transferred from the cardholder’s bank to the trader’s processing bank. After this the amount is credited to the merchant account within 3 working days.

There are two major concerns with respect to processing of online payments: data privacy in a transaction and ensuring valid transactions to consumers. Hence, there are a few measures that must be taken before a transaction takes place.

For online processing of credit cards, it is necessary to use the services of AVS or Address Verification System. This service ensures that the correct address is entered on the form and matched with the address mentioned in the cardholder’s billing statement. Moreover, CVV or Credit Card Verification and CVV2 can be used. This is a 3-digit number located behind every Master Card and Visa card. Mail orders are safer due to the presence of signatures.

When transactions are reversed the merchants suffer from chargebacks. Money gets deducted from a merchant account rather than it being added due to the occurrence of a chargeback. There are several reasons as to why a chargeback occurs, such as expiration of credit cards, double-charging, and consumer disputes. If a merchant account incurs many chargebacks, there is a possibility that the trader could loose his/her merchant account. Once this happens, a trader gets placed in a “match” list for many years. Bank Card Law has access to this list which helps in the identification of firms that have lost their accounts due to high chargebacks. This adds to the difficulty of obtaining another merchant account later. Hence, chargebacks need to be avoided by merchants. Contact one of our helpful account representatives to assist you in the setup of a high risk merchant account or offshore merchant account for a high risk merchant.