The Life Cycle Of An Online Card Payment

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Have you ever wondered how the process of purchasing something online is carried out? Have you ever wondered why some merchants take longer to settle card payments? The answer can be found within the online card payment process. 

Consumers have several options for making payments for items when they shop online, from credit cards to innovations like digital wallets and real-time bank transfers. 

However, purchases made through a credit card are quick, safe and easy, so if you still need one, apply for credit card today.  

Consumers expect the payment process for buying goods or services to be a simple and quick transaction. However, the payment process is intricate and involves various participants.

To understand everything about the online card payment life cycle, keep reading.

What is the Online Card Payment Life Cycle?

The online card payment life cycle is essential to understand when making online payments. The process starts with the consumer initiating a purchase on a website or application. Next, the transaction is sent to the merchant’s payment gateway, where it is verified. 

The payment gateway routes the payment through the appropriate financial institutions and networks and ultimately to the bank or card issuer. 

The payment is then accepted, and funds get transferred to the merchant or receiver. This completes the online card payment life cycle.

Participants in the Online Payment Ecosystem

In the process of a credit card transaction, a large number of parties are involved, including

  • The consumer who uses a card to buy goods or services.
  • A merchant selling goods and services. 
  • The merchant’s bank sends the credit card transaction for approval.
  • Credit card issuers like banks and financial institutions issue credit cards. 
  • The card network, such as MasterCard, Rupay, and Visa.
  • The payment processor that handles credit card transactions. 
  • The payment gateway that processes online card payments. 

Process of Online card Payment

So, now that you know the parties involved, let us go through the payment process.

  1. Authentication

The first step in the online payment process is authentication, where a cardholder’s identity is verified. 

At this point, the accuracy of the card number and the identity of the consumer initiating the transaction are both checked. Consider this step as the bank’s representative requesting identification or checking the signature during an offline payment transaction. 

This stage confirms an individual’s identification; it does not attempt to transfer funds or examine an account’s balance.

  1. Authorisation

In this step, the payment gateway of the acquiring bank will connect to the issuing bank via the card network to determine whether or not the card should be charged.

The issuing bank checks the card account’s balance to ensure enough limit is available for the transaction. The customer’s account gets charged if the evaluation’s outcome is favourable.

The card network then transmits the message from the issuing bank to the acquiring bank, receiving either a successful authorisation or a rejection with a justification.

This message is then sent to payment processors by the payment gateway of the acquiring bank, which in turn transmits it to the merchant.

Also Read: How To Accept Credit Card Payments Online?

The merchant has to follow the instructions in the following stage, called capture, to get the online payment amount in their account.

  1. Capture

In this step, the payment processor contacts the acquiring bank with a capture request on behalf of the merchant. Now, the funds get transferred from the issuing bank to the acquiring bank.

After this, the payment processor collaborates with the acquiring bank to pay the merchant the transaction amount.

With this, the transaction is complete, the merchant receives the payment, and the customer’s account is debited. 

With this, the entire online card payment process gets complete! An interesting thing to note here is that each stage only takes a few seconds to complete.


The life cycle of an online card payment involves several steps, including processing the payment request, verifying the card details and approving the payment. All these steps result in a successful online credit card payment.

The life cycle of an online card payment is essential for the safe and efficient use of card payments in business and for enhancing customer experience.


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