How Online Card-Based Payments Function?

Online card-based payments are consumers’ perfect choice, as they can make purchases with them in the comfort of their homes. The process of making credit card payment online isn’t new for consumers, but do you know what elements are involved in this? Read the article to find out more about this.

Guide to Online Credit Card Bill Payment

The payment process involves the use of a credit card, and as it is linked to the consumer’s credit line, they need to pay for the incurred bill later. Here is a step-by-step guide on “how online card-based payments function?”:

  • The consumer chooses the items they want to buy online and proceeds to the checkout page, where payment options are available
  • On the checkout page, choose the credit card payment option and enter the necessary information, such as the card number, expiration date, and CVV
  • Now what happens is the online retailer’s payment gateway securely transmits the payment information to the payment processor
  • In this next step, the payment processor verifies the card details and checks if the consumer has sufficient funds  
  • If the card is found valid and the funds are available, the payment processor authorises the transaction and sends a confirmation message to the retailer’s payment gateway.
  • The retailer’s payment gateway confirms the payment and sends a receipt for the purchase to the consumer.
  • The payment processor sends the payment amount to the acquiring bank which processes the transaction and later it is transferred to the retailer’s account.
  • Finally, the acquiring bank settles the transaction with the issuing bank, which deducts the payment from the credit card available balance.

From above, now you’ll have an idea about the online card-based payment process. As you can see it is quick and secure. The security and verification checks your payment goes to protect you against fraud and unauthorised access to your card details.

Which Entities are Involved in Credit Card Online Payment

Several entities take part in your credit card online payments, this includes: 

  • Cardholder: It is you who owns the credit card and uses it to make purchases online.
  • Merchant: This is the online retailer or business that sells goods or services in which you are interested. 
  • Payment gateway:  It securely transmits your credit card information from the merchant’s website to the payment processor.
  • Payment processor: The company who verifies payment details and authorises the transaction.
  • Issuing bank: The bank that issues consumer credit cards and who is responsible for approving or declining the transaction.
  • Acquiring bank: The takes the payment on behalf of the merchant and later transfers them to their account.
  • Card network: The system that links the issuing bank, acquiring bank, payment processor, and payment gateway is your card network. You’ll have Visa, Mastercard, American Express as some of your popular card networks.


Credit card online bill payment services make our life easy and convenient as we don’t have to withdraw cash to complete a purchase. So the issue of “can i transfer money from credit card to bank account?” doesn’t come up. 

Online Card-Based payments function in just a few clicks and allow the cardholder to select the items they wish to purchase and get them delivered to their doorstep. Through the payment gateway to the payment processor, your card details are safe and the transaction approves in just a few minutes. Once the acquiring bank transfers the funds to the retailer’s account, and the cardholder receives a receipt for the purchase, the billing amount reflects on the card statement.

Also Read: How to Transfer Money From Credit Card to Bank?

If you see from the merchant’s perspective, credit card online bill payment functions provide them a secure and convenient way to receive money from customers. As consumers pay for goods or services on the merchant’s website. This is why now merchant integrate a payment gateway into their website to securely transmit the payment information to the payment processor. Once the payment is approved, the merchant receives the funds in their account, and the payment is settled with the acquiring bank. 

Overall for both merchants and consumers, the Online Card-Based Payments function fits the best.

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