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Question

Difficulty: MediumElectronic Banking Services and Payment Systems

In modern e-commerce, electronic payment gateways facilitate real-time fund processing for online purchases. Arrange the following steps involved in processing an online card transaction in the correct sequential order from initiation to completion.

  1. 1The customer enters payment card details on the merchant's website and submits the purchase request.
  2. 2The payment gateway encrypts transaction data and transmits it via a payment switch to the issuing bank.
  3. 3The issuing bank verifies security credentials and confirms availability of funds to approve the transaction.
  4. 4An authorization response is sent to the merchant portal to finalize the sale and debit the buyer's account.

Answer

The correct sequence begins with the customer submitting payment details on the merchant website, followed by the payment gateway encrypting and routing data to the issuing bank, then the issuing bank verifying credentials and approving funds, and ending with transaction authorization sent to the merchant and account debiting.
The correct operational sequence flows chronologically from customer data input, to encrypted gateway routing via the payment switch, issuing bank authorization, and finally merchant confirmation with account debiting.

Step-by-Step Solution

1
Identify the initiation phase.
The buyer inputs card credentials on the e-commerce checkout page.
An electronic transaction process must begin with user input and order submission.
2
Trace data transmission and routing.
The payment gateway encrypts data and routes it through a payment switch network.
Security protocols mandate encryption before routing sensitive card data to bank servers.
3
Identify the authorization phase.
The issuing bank checks account balance and validates authentication credentials.
The customer's bank holds sole authority to verify account solvency and authorize payment.
4
Determine settlement and order finalization.
Authorization status reaches the merchant portal, completing the order and debiting the account.
Final confirmation enables the merchant to release goods and triggers account settlement.

Key Concept

Electronic Payment Gateway Transaction Workflow
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Topics

Electronic Banking Services and Payment Systems

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