Online Payments — the basics

Working with software development is very challenging. You can frequently change the target business you’re developing on. If you’re starting on a project in which doing a payment is a must-have, then consider this article as your starting point.

Basically, the shopper adds its payment details at the merchant’s checkout page which requests a payment authorisation to the acquiring bank that bypasses it to the issuer. This information will be validated and an authorisation or a decline is returned. There’s a second part in which the merchant reconciles all the payments ensuring the transactions were made successfully.
It seems a lot of new information and specific terms right?

Who is who?

The shopper

The merchant

The acquirer bank

The Issuer

The shopper’s journey

Unless the merchant is using a 3rd party application or website to handle the checkout flow (such as Shopify, Stripe Checkout or other), it is necessary to build it, reading and storing all the required information. A shopping cart flow style should be implemented and will need to store each item the shopper is adding or removing.

Payment methods

Storing information

Currency information

A Payment confirmation page

Keep a record on the processed payments

Payments behind the scenes

Processing a payment requires different steps between the actors involved on the process and also depending on the sort of payment methods being used.
Considering credit cards we have three main events happening: authorisation, Capture and settlement. What is the difference between them?

Authorization

Capture

Settlement

If processing payments is an important step so doing the reconciliation processes as well. This will allow the merchant to validate all the information and guarantee the business is working as expected. The financial reconciliation can turn to be very simple or very complex depending on the merchant’s business. From a technical point of view, the merchant should have in place processes to fetch the processed transactions within a time range, fetching the equivalent data from the payment service providers and compare that with the stored payment transactions information, ensuring the correct amounts were charged and transferred from the shoppers bank accounts. Also depending on the size of the merchant’s business a lot of information will be used to build finance reports supporting the decision making process.

Processing payments isn’t only about showing a total amount and charging it. There are a few topics that need to be under the merchant’s radar.

Chargebacks

Refunds

Fraud Rates

Keep the shoppers happy!

And that’s it! Just a simple and raw view on implementing online payments. Do your experiments, try new approaches and alternative methods, but ensure you keep them within the standards.
I hope it helps!

Software Engineering Manager and Software Engineer | Server Side Trainer | Human stuff as a hobby.