The Payment Process: Who's involved at what stage?
Blog post from Basis Theory
Payment processing enables transfers from buyers to merchants for goods and services through credit cards, ACH, cryptocurrencies, and other payment methods, involving the buyer, merchant, payment service provider, card network, customer bank, and merchant bank. For credit card payments, customer details move through security and fraud checks by the merchant, PSP, card network, and issuing bank, which approves or declines the transaction based on available funds and merchant credibility; the merchant initially receives only an authorization, while actual funds are settled later in batches. Merchants may use authorization holds to reserve customer funds when final charges are uncertain, as in hotel and car rental transactions, though these holds can inconvenience customers and create penalties if not closed promptly. Compliance with PCI-DSS rules for handling personal information is a major operational cost, leading many merchants to outsource data collection, storage, and tokenization to specialized providers. While relying on one PSP can simplify operations, larger merchants often use multiple providers to avoid outages or service disruptions and to negotiate better processing costs.
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