When implementing electronic payment processing, it is important to understand how the Internet payment processing system works. Participants in a typical online payment transaction include:
- Customer: Typically, a holder of a payment instrument such as a credit card, debit card, or electronic check from an issuer. The customer initiates purchase of a product and pays using the payment instrument.
- Issuer: A financial institution, such as a bank, that provides the customer with a payment instrument. The issuer is responsible for the cardholder's debt payment.
- Merchant: An organization which sells goods or services to the cardholder via an electronic medium such as a telephone or website. For purposes of this document, the goods and services are ordered using Aptify. Organizations that accept electronic payments must have an Internet Merchant Account with an acquirer.
- Acquirer: A financial institution that establishes an account with the merchant and processes payment authorizations and payments. The acquirer provides authorization to the merchant that a given account is active and that the proposed purchase does not exceed the customer's credit limit. The acquirer also provides electronic transfer of payments to the merchant's account, and is then reimbursed by the issuer via the transfer of electronic funds over a payment network.
- Payment gateway: Operated by a third-party provider, the gateway system processes merchant payments by providing an interface between the organization's ecommerce activities and the acquirer's financial processing system. The company providing this service is commonly called the gateway provider. PayPal is an example of a gateway provider.
- Processor: A large data center that processes credit card transactions and settles funds to merchants. The processor is connected to the organization's site on behalf of an acquirer via a payment gateway.