Online Payment Flow of a Card Transaction

Those of you who have been making online payments or are thinking about transacting in the future must have wondered sometimes about its working and back-end process. A lot of you may not be aware, which parties are involved and what steps take place in the background. This article would provide you with insightful information about the online payment processed with the debit card or credit card.

So, there are various parties involved in the online payment done through the card. It is essential to know about them to understand the further process and steps of the online payment with a card.

Parties involved in the Card transaction

Some of the terms used in the online payment language must be new to you, whereas some are very common that we use in typical situations too; however, let us understand the below terms from the angle of the online payment with a card.

1. Customer / User

The customer is the party who buys and pays for the services or products. He initiates the online payment on the business website/app/payment link through the payment gateway.

2. Merchant

The party who receives the payments through any payment methods for the services or product they sell to the customer is called the Merchant in the payment gateway terminology. They can be a businessman, website, or app.

online payment

3. Payment Gateway (Aggregator)

This party facilitates the payment processing from the customer to the Merchant; it acts as a mediator. For example, PayKun is a payment processor.

It integrates various payment methods in one place, and thus the customer can choose their preferred one to initiate the transaction. It has multiple tie-ups with the bank payment gateways and other important third parties that enable the smooth processing of the online payments.

4. Card Networks

These are the card-issuing companies like Discover, Visa, MasterCard, American Express, etc. These are the connecting place for the issuing and the acquiring bank (explained further) in transferring the online payments.

5. Acquiring Bank

The payments deducted from the issuing bank are then accepted by the Acquiring bank. It plays a vital role in online transactions through a merchant account of the payment gateway.

6. Issuing Bank

When the payment is made, the amount is deducted from the customer’s bank account, known as the issuing bank. It is also responsible for managing card payments, such as providing credit card statements, offering consumer credit, etc.

This article will be giving information about the card payment made through a 3D secured (3 Domain) transaction process.

[Fact: To complete the 3D Secure payments, the three different domains interact in its process; that is why it is known as 3 Domain Secure: the issuer, the acquirer, and the card network processors.]

Stages of the Online Card Payment Process

The card payment goes through 3 major stages which include: Authentication, Authorization, and Capture.


A few analyses and validations are done by the payment gateway, acquiring bank card network, and the issuing bank in this stage. It basically authenticates the customer’s identity, i.e., the one who is making the payment using the respective card details. Also, this is the stage when the 3D authentication is carried out.

  • Let us take the example of the card payment done through PayKun to understand how the process works. So, the customer initiates the transaction, enters his details, and the card details.
  • These details are securely transmitted to the PayKun server and further processed through the acquiring bank and then to the Card Network.
  • Card Networks runs the validation and processes the fraud evaluation. After that, it forwards the payment request to the issuing bank to analyze on their side. The 3D authentication is done at this stage. The next stage of the process depends on the successful 3D authentication with the OTP and the password.


After the successful authentication, the next stage involves permission to transfer the requested funds. In simple words, PayKun would send the authorization request to the issuing bank to transfer the requested amount. So if the authorization is received from the issuing bank, the payment is deducted and transferred to the PayKun merchant account. So the authorization can be a success or failure from the issuing bank.

  • The acquiring bank validates with the issuing bank through the card networks, and checks for any errors such as the transaction limit surpassed or to check the availability of the funds.
  • The issuing bank checks the same, and if the balance is available or there are no other issues, then the requested amount is blocked by them.
  • The result of the authorization is passed to the acquiring bank through the card network. Also, the issuing bank provides the result to the customer.
  • PayKun receives the intimation about the transaction status, and it passes the same to the Merchant.


After the authorization is complete, the payment is transferred to the merchant account (acquiring bank). The stage wherein the Merchant confirms that the respective amount belongs to him is called Capture.

  • PayKun further settles the transaction from the acquiring bank to the bank account of the Merchant.
  • The payments done through PayKun are auto-captured, and so with this, the whole card payment is complete.


Once the payment has been completed, you would receive an email from PayKun with the transaction status and the details. Also, the bank notifies the payment deduction from the account.

There can be a few scenarios wherein the situation may be confusing, but it isn’t really:

  1. The payment status is unclear in that case of a bad network or technical errors. After 24 hours or with the help of reconciliation, the actual status of the transaction becomes clear. This is known as Late-Authorization or Delayed Capture.
  2. The payment is failed, but the amount is deducted. In this situation, you need not panic. The amount will be auto-refunded by the bank in 7 – 14 working days. You may not receive the refund notification from the bank side, so you may keep checking. There is no involvement of any party, Merchant, or the payment gateway in the auto-refund.

Thus, this is how a card payment is processed through PayKun smoothly and securely without any hassle.

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