In the last few years, more and more people around the world are making cashless payments. Everything seems so simple: you hold the payment instrument (card, phone, smartwatch, accessories, etc.) to the POS terminal or enter the card details online, and in a few seconds you manage to complete the transaction. Have you ever wondered how payment is made and what is the process in which each transaction goes through?
Clients are increasingly paying online and in retail stores without using cash. Do you want to know what it takes to make a payment, who are the participants in the process, and are the transactions you make secure? Find the answers to all these questions in our article:
1. Participants and technology of the process
There are several parties involved in each payment. They are the customer, the merchant, their banks, a card scheme (such as Visa and MasterCard), and the technology that processes payments. Each of the participants has an important role in this process. The customer and the merchant are the two endpoints of the transaction and the goal is for the merchant to receive the funds that the customer owes him.
The connecting point between the two parties to the payment is the payment processor – a system that has the task to make the transaction possible. This system belongs to the merchant and must certify whether the payment can be made with the card used. The payment processor is used for payments that are made in retail stores.
А payment gateway is used for payments that are made in online stores, in apps, or through a mobile operator. With the payment gateway, information and payment data are transferred from one participant to another. The function of this device is to provide a connection so that the details of the transaction can be transferred without risk to the funds and the merchant can receive confirmation that it has been completed.
2. Security in the payment process
The security of the sum in the account is one of the most important things in any transaction. Luckily, the security of the technologies that process payments are evolving with each day. Here are some of the security methods that are used to process payments:
Tokenization is a process in which sensitive information is replaced by a “token” in order not to be shown. When a payment is made the details of the payment instrument are hidden and the customer can be sure that there is no risk of misuse of his/her funds. Tokenization can be used for all types of payments.
The PCI DDS certificate was created by the world’s biggest card schemes (Visa, MasterCard, etc.) to set a security standard for all companies involved in payment processing. iCard has a PCI DSS Level 1 certificate, which proves that the company works following the highest levels of security in the world.
3D Secure 2.0 is another step in ensuring the complete security of funds. 3DS2 is used for online payments and allows the customer to confirm (via a push notification) any transaction that is made with his/her cards.
3. The best assistant in the payment process
For the payment to be successful, the customer and the merchant must have “assistants” to complete the transaction. For the merchants, these are the device/system that accepts the payment and makes the transaction possible. The customer must have a payment instrument linked to an account with sufficient funds to make the payment.
What does a digital wallet need to have in order to become the perfect payment assistant? Choosing a digital wallet or bank in which to open an account is very important. To make payments as easy as possible for each client, they should be available in stores around the world where contactless payments are accepted, as well as be able to be made in online stores where this is possible. Transactions have to be secure and customers’ funds should be protected.
iCard is the digital wallet that will give you complete freedom in payments. With it, you can open many accounts in different currencies for free and make easy and secure transactions in millions of retail stores and online shops. Fund your account, select one or more payment instruments with which you want to make transactions (card, phone, smartwatch, or NFC keyfob), and leave the rest to your favourite digital wallet.
Learn more about iCard: https://icard.com/bg