The Tech behind Online Payment Systems

If you're like many people, you don't pay too much attention to the technology behind your favorite payment company. If you like credit cards, you just whip out your card whenever the cashier asks for it. Or, you provide your credit card numbers to complete online payments.
So, how do online payment systems actually work? What goes on after you’ve authorized PayPal to process a transaction for you? Take a moment to read this article because we’re about to reveal all the secrets for you.

Payment Processor

Contrary to popular opinion, payment processors are different from payment gateways. The latter works like a point of sale. The former handles card data, limits, validity, security, and fees.
Many digital wallets act as both payment processors and payment gateways. PayPal is an excellent example. It helps you send money to friends and merchants. Additionally, it also helps businesses receive money from customers.
The role of a payment processor is similar to that of an intermediary. Let’s say you want to deposit money to one of the top online casinos reviewed by casinos.us. You want to use PayPal because it's safe, fast, and reliable.
PayPal will handle the hard work of providing your card information to the recipient bank. It will also keep your data safe. All you need is to confirm the payment amount and authorize the transaction.

Payment Gateway

A payment gateway is a program that helps online businesses accept payments from customers. Some gateways help you accept transactions from one company. Others help you process payments made through different banking providers.
For a payment gateway to work, it contains tech features that bring together these players:

• The Merchant—refers to the business involved in a transaction. It could be a shopping app, personal blog, stockbroker, or a local restaurant.
• The customer—describes the person who wants to buy something from the merchant. He or she needs a card, digital wallet, or bank account to transact with a merchant.
• The acquiring bank—describes the bank that will receive payments on behalf of the merchant involved. It could also be a digital wallet or a Bitcoin wallet.
• The Payment Company—refers to the company you're using to transact with a merchant. It could be a credit card company, digital wallet, or bank.

Payment gateways provide an important service during transactions. They help you provide your bank details, verify the payment amount and the recipient’s data. Next, they forward your data to your preferred payment app for approval.

Blockchain Technology

When you send Bitcoins to a friend, the money goes through a decentralized ledger called the blockchain. It's not an intermediary, though. It's the technology that powers cryptocurrencies.
Blockchain keeps records of every crypto payment. Surprisingly, no single person manages this system. It’s decentralized, meaning it takes the efforts of multiple people to keep it safe.
Satoshi Nakamoto, who created Bitcoin in 2009, designed blockchain as a system that helps people complete peer-to-peer transactions. Satoshi's goal was to develop a system that was faster and cheaper than traditional financial institutions.
Bitcoin processes payments within 20 minutes, meaning it's faster than banks. Its charges vary depending on the number of pending payments in the blockchain. That being said, its competitors like Ethereum, Cardano, and Litecoin offer faster payments at cheaper rates.

Data Encryption

Online payment systems rely on data encryption to process transactions safely. Encryption scrambles your credit card numbers, names, and addresses to make the data useless to hackers.
Without encryption, savvy hackers can intercept your payment and steal your credit card information. And if they have your financial data, nothing can stop them from emptying your bank accounts.
Payment companies use Secure Socket Layer (SSL) for data encryption. It’s the standard way of keeping information secure from cybercriminals. They also protect your account with a password, Two-Factor Authentication, and unique withdrawal pins.
Some payment companies elevate their security systems by hiding your real credit/debit card numbers from merchants. They assign a unique token number to each client. While you're making a payment, the payment company shows your token to the merchant. This helps minimize the number of people who know your banking information.

Chip Card Technology

Chip card technology is sometimes called EMV to represent the three companies that created it: Europay, MasterCard, and Visa. These card processors created EMV in 1996 to facilitate secure card transactions.
EMV features a security chip that makes every card payment unique. They also involve the use of a transaction code for every payment. This helps eliminate the possibility that someone can duplicate a card transaction.
Due to the growth of online payments, most cards have replaced signature systems with pins. Modern cards ask you for a unique pin to verify payments. Because chip and pin technology makes cards secure, it’s nearly impossible for someone to hack your card.
They may steal your card data if you fail to secure it. But hackers can’t break the security systems used by card companies to keep your money safe.

Website Design

Online payment companies need websites to provide their services. A website helps you create an account, link your credit card and authorize payments. The best e-wallets have simple, mobile-friendly websites.
Mobile support is crucial in a world where more people own smartphones and desktop computers. Besides, the average online shopper shops through their mobile. And no one will browse products on a mobile device only complete the transaction on their laptop.
Now, a payment website needs several important features. It should be attractive, well-organized, and easy to use. It also needs to be secure and reliable—people will ditch a payment wallet immediately after it starts to crash.

Additional Technologies

When you think about it, the standard payment app has countless tech features. Think about multi-language and multi-currency support. These features help payment wallets reach a broad audience. Then there’s the technology that enables chargebacks, customer service, and canceling payments.

Perhaps the most unique innovation in the modern payment scheme is Pay by Phone. Companies like Boku use this technology to help you pay for goods and services on credit. You settle the bills together with your phone bill afterward.