How do payment systems authenticate?

16 May 2022 By PAYCEC

The payment authentication systems include a lot of parties: from customers, merchants, banks, to payment gateways, payment processors (card schemes), and card issuers. The purpose of this system is to confirm a customer’s identity, making sure that the transaction is authentic, with the card owner's knowledge.

Here how the payment systems authentication works:

  1. Customer will go on the merchant site to make a purchase.
  2. Merchant will take the customer directly to a safeguarded payment gateway checkout page (for example PayCEC payment gateway ).
  3. Customer will fill out their information: card owner name, card number, CVV number, expiration date.
  4. Payment gateway will then encrypt the data and transfer it to the card schemes (Visa, Mastercard, Amex, etc.).
  5. Card schemes will identify and decide whether all of the filled out information is authentic (especially if the CVV code is correct).
  6. Payment processors will then send a One Time Password to the customer phone for additional security. This is the 3D Secure protocol.
  7. Customer will receive the OTP code and input it into the payment gateway checkout page.
  8. Bank will be the final one to check all the data, if all are correct, the money will be transferred from the customer bank account to the merchant account. The transaction will be completed that way with minimum risk.

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