A typical IP electronic check or credit or debit card transaction
would proceed as follows, with the entire process taking just
two to three seconds over the
Internet:
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As a consumer you pass your card or check
information to a merchant to pay for a product or service
or enter the card number yourself at your favorite website.
At that moment your transaction information is captured. |
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This information, along with the transaction amount,
is transmitted to a gateway where it is checked against
fraud parameters. The card or check number is passed against
a series of criteria: known fraudulent numbers lists,
point of origin for high-risk countries, as well as a
variety of merchant customizable parameters. If
a problem is evident the transaction process stops here. |
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If the information is correct and no fraud
is apparent, the information is passed to a processor.
The processor contacts your bank and initiates a transfer
of funds between financial institutions to cover the transaction.
If there is an insufficient credit
line or funds available to cover the transaction it is
declined at this point. |
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If an appropriate credit line or funds on deposit is
available, the transaction proceeds. An authorization
code is then sent. On an approved transaction the processor
notifies the gateway of the authorization code, the gateway
receives this code and communicates this to the merchant
… purchase made. Through the Internet all this transpires
in seconds, with the bank side of the transaction completed
later in the day during batch settlements between financial
institutions. |
