Payment Processing 101

Posted on 11/16/17 1:38 PM by Yuri Emond

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First, what is a payment processing service? It is a service that processes incoming payments, through which you will be able to make sales and accept secure online payments. You see a list of different online payment options on our blog and decide which one is right for you, as well as our rundown of the myths centering around collecting donations online through payment processors.

In other words, it is the connection or the technical “gateway” between a website (your Amilia store) and the financial institutions that manage the various means of payment. This payment processing service allows you to receive monetary payments made online.

In this article you will learn more about how the payment process and how payment processors work for payments made by credit card or electronic check (Direct Debit).


To help you have a better understanding, we have prepared a scenario:

After the holidays, John decides that it’s time to get back in shape and register for a sports class. Following his research, he comes across an Amilia online store and he decides to sign up for a fitness class. He completes the registration form and checks out using his credit card.

For the moment, everything seems quite simple. The payment of the customer has been accepted and the invoice and the receipt are added to his account. However, for the payment to be accepted there are several stages the transaction must go through before the payment is complete.

Processing a Credit Card (Visa or MasterCard) Payment

Step 1: The customer pays with their credit card.

Step 2: Payment is Authenticated – The merchant’s system (Amilia) captures the information associated with the customer’s account and sends it securely to the acquirer.*

Step 3: The transaction is submitted — the acquirer asks Visa or MasterCard to obtain authorization from the consumer’s issuing bank, for example Citigroup or RBC.

Step 4: The authorization request is made — the card system submits the transaction to the issuer** for authorization.

Step 5: Authorization is Received — the issuing bank authorizes the transaction and forwards the response to the merchant.

Step 6: The issuing bank sends the payment to the merchant’s bank, who deposits the payment into the merchant’s account.


Note that all these steps are done in a fraction of a second, so when paying with a credit card you have the payment acceptance in an instant.

Now back to John and our scenario… John liked his fitness class and decided to join another; however, he decided to finalize this registration by paying with an electronic check (e-check).

If you accept payment by e-check, you have probably noticed it can take a few days before the payment is officially accepted. Here are the steps an e-check must go through before being deposited to the account.

Processing an E-check (Direct Debit) Payment

Step 1: The customer pays with an e-check.

Step 2: The payment is authenticated by the payment processing system, e.g. Paysafe, however no authorization is done in real time.

Step 3: The payment is processed by the financial institution of the acquirer.*

Step 4: The bank checks if there are funds available. The waiting time may vary depending on the bank, it can take up to 10 business days.

Step 5: Once the payment is accepted by the bank in question, the electronic check goes through each step again to finally be deposited into the account.


Note that the processing of an electronic check can take up to 10 business days.

This article aims to clearly explain the different steps that the money from your payments must go through before arriving in your account. We are aware that when it comes to money the subject is more sensitive; however, knowing all the steps involved in this process, is essential to ensuring better security and more confidence.

Interested in finding out how Amlia can help you simplify your day-to-day?

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*What is an acquirer? It is a financial institution certified by MasterCard and Visa that helps merchants accept credit card and electronic check payments online. For example, People's Trust, Merrick, Moneris.

**What is an issuer? It is a bank, a credit union, a loan and savings association, a government entity or a retailer that offers a line of credit or a debit card to a customer or a business. For example, RBC, TD and Scotiabank.