Making payments for goods or services has never been easier than now. With just some ciicks on your phone or laptop, you’re good to go. But have you wondered the processes involved whenever you slot your card in a POS or dial your card number on a website? A knowledge of this can go a long way in keeping you safe from scammers.
There are basically four parties involved before a payment is completed. The parties are:
1. The merchant
2. Payment gateway
3. Payment network
4. Customer bank.
Let’s discuss the above and see their relationships, risks and safety methods.
The merchant here represent anybody or organization you wish to make payment to for services rendered or goods bought. E-commerce websites like Jumia and Konga, restaurants, boutiques, and every other store that uses POS, are all merchants as used here. When you slot your card into the POS or enter your card number during checkouts in online stores, your information (data) is copied to the payment gateway.
There are numerous payment gateways; merchants sign up for the ones that are convenient and affordable for them. The basic role of payment gateway is to authorize transactions between the merchant and their customers.
The gateway copies the merchant ID and that of the customer which is primarily the 16 digits card number, expiry date, CVV and other things depending on the security system of the card. The gateway equally gets to know which type of security system that is activated in the card.
There are 2D and 3D security systems. 2D security only checks for the information on the card. Once your card number, CCV and card expiry date tally, the gateway gives the transaction a pass.
Note: Information about the type of security is not kept by the payment gateway, but it is the one to execute it.
3D security involves other security checks that are not written on the card, such as pin and OTP(One Time Password). Whenever you’re asked for PIN or OTP before completing transactions with your card, know that your card has 3D security.
A 2D security card is easier to be used by criminals when stollen because all the information needed to use it is written on it. This is why it is very important that you guide your card carefully.
3D secured card is safer but more difficult to use, even by the owner. You know the feeling when you’re in a haste but you have to wait for OTP and all that.
This is a kind of association of all active card services providers across the world. This include VISA, Verve etc. They determine the kind of security they use for their card. They share information about the subscribers with payment gateways. When payment gateways are through with authentication, they send information to the payment network who now validates and send payment request to bank.
Your bank at this point receives payment request from payment network. The information your bank needs is your card number and the expiry date. It will verify the amount to ckeck whether it is within the daily limit and your account capacity. It will then approve or decline the request and send information in reverse order till it gets to the merchant. All these take place in few seconds.
Note: If you have used your card successfully on a particular platform, chances are that you may not be asked for OTP in subsequent transactions even if your card is 3D secured. In some countries too, light payments i.e. transactions involving small amount, do not require extra security such as PIN and OTP.