How does a payment work?

If you have ever wondered or are curious to know how this process happens, today we will tell you in detail.

What is a payment transaction?

A payment is a financial transaction in which funds are transferred from one party (the buyer or payer) to another (the seller or payee). Payments can be made using a variety of methods, including cash, checks, credit or debit cards, and electronic methods such as bank transfers or online payment platforms. Payments can be made for a variety of purposes, including purchasing goods or services, paying bills or debts, or making donations or gifts

What is required to receive transactions?

To receive transactions, these 6 elements are required:

1. A payment account: This could be a bank account or an online payment platform account, where the funds from the transaction can be deposited.
2. Payment processing equipment or software: This may include a point-of-sale system, credit card reader, or online payment gateway* to facilitate the transaction.
3. Payment acceptance policies: The seller or merchant may need to have policies in place to accept certain types of payments, such as cash, checks, or credit cards.
4. Payment security measures: To protect against fraud and unauthorized access, the seller or merchant may need to implement security measures such as encryption, authentication, and fraud prevention software.
5. Customer service: The seller or merchant may need to provide customer service to handle any questions or issues related to the payment process.
6. Legal compliance: The seller or merchant may need to ensure that they are in compliance with local, state, and federal laws and regulations related to payment processing.

Payment gateway: is a software application that facilitates online payment transactions between merchants and buyers.

Transaction payment processing

A payment usually works as follows:

1. The buyer initiates the payment by providing their payment information, such as their credit card or bank account details, to the seller or merchant. This can be done online, in person, or over the phone.
2. The seller or merchant submits the payment request to their payment processor, which is a company that handles the financial transactions between the buyer and seller.
3. The payment processor verifies the payment information and ensures that the buyer has sufficient funds or credit available to complete the payment.
4. If the payment is approved, the payment processor will transfer the funds from the buyer’s account to the seller’s account, minus any fees or charges for the transaction.
5. The seller or merchant will receive notification that the payment has been completed, and they can then release the goods or services to the buyer.
6. The payment process is typically completed within a few minutes, but may take longer depending on the type of payment method used and the availability of funds.

To facilitate the transaction, the payment processor (the company that handles the financial transactions between the buyer and seller) will send the payment request to the buyer’s bank or credit card issuer to confirm that the funds are available. If the payment is approved, the bank or credit card issuer will release the funds to the payment processor, who will then transfer the funds to the seller’s account, minus any fees or charges for the transaction.

Enrich transactions

When the purchase process is completed, users receive a notification that a transaction has been made in their account. What happens sometimes? The transaction is displayed as “**Supermarket 4563”, this may cause mistrust so it is important to enrich the transactions. Transaction enrichment has an amazing impact on customer experience and reduces costs, chargebacks, and tech development.

How does it work?

Transaction enrichment works by adding additional information or context to a financial transaction before it is received by the merchant or seller. This can be done in real-time, as the transaction is being processed, or it can be done retrospectively by analyzing the transaction data after the fact.

Overall, the enrichment process helps to create a more secure and efficient payment ecosystem by providing a more complete and accurate picture of the transaction.

Do you know that some of our customers after the implementation of our solution, have achieved:

1. More than 95% coverage on logos, names, and categorization.
2. Improved customer by 27% on NPS.
3. Save money and reduced their costs by 55%.

Would you like to enrich your financial product transactions? Contact us 👉 https://www.jointriple.com/product/enrichment-data