Finance · Payments

Online Payments

Reference entry · last updated 20260910

Previous version: 20260910 archive.

Online payments are payments initiated through internet-connected services. A checkout can use card payments or account transfers, each with its own processing, settlement, and dispute arrangements.

1. First principles: payment layers

An online payment can be described through its instrument, participants, instructions, and movement of funds. The following is an explanatory organization of those concepts:

Instrument: the means used to initiate a payment, such as a card or account transfer.
Participants: the payer, payee, and institutions providing the service.
Clearing establishes and reconciles payment obligations.[1]
Settlement discharges obligations; merchant payout identifies delivery of funds to the merchant.[2][3]

Ownership and payment function are separate dimensions. The Clearing House’s EPN, for example, is a private-sector ACH operator.[4]

2. The four-party card model

The four parties are the cardholder, merchant, issuer, and acquirer. The card network connects issuing and acquiring institutions under its rules. The issuer provides the card account; the acquirer serves the merchant.[5]

A PSP can combine services, including processing and acquiring. Its exact role depends on the region and arrangement.[6]

3. Card payment lifecycle

Authorization approves a request and can reserve funds or credit. An uncaptured authorization can expire or be canceled.[7]
Capture submits an authorized amount for collection. Partial and multiple captures depend on provider and transaction support.[7]
Clearing and institutional settlement establish and discharge obligations.[1][2] Payout to the merchant is a separate stage; Adyen explicitly distinguishes its “Settled” status from merchant payout.[3]
A refund returns a captured payment through the provider’s refund process. A chargeback arises through the issuer’s dispute process, with its own evidence and outcome.[8][9]

4. Online card security

Fraud liability depends on applicable network rules and transaction circumstances. An initial dispute debit does not necessarily mean a final merchant loss.[9]

EMV 3DS authenticates consumers for card-not-present payments. Eligible transactions can receive a fraud-liability shift; exceptions and non-fraud disputes remain.[10]

PCI DSS governs payment-account data security. Version 4.0.1 and current SAQ eligibility criteria apply to the actual integration; an iframe alone does not establish eligibility for SAQ A.[11]

5. Philippine and US payment systems

NRPS provides the Philippine retail-payment framework under BSP oversight.[12] InstaPay and PESONet are covered in separate entries.

BancNet and PCHC merged effective 20260601. BSP lists Payments Network of the Philippines, Inc. (PNPI) as the operator of InstaPay and PESONet. PhilPaSSplus is BSP’s peso settlement system.[13]

QR Ph identifies a national QR standard and the merchant-payment brand. BSP’s 20260729 FAQ uses InstaPay QR for person-to-person payments; both retain the national standard.[14]

US ACH includes the privately operated EPN.[4] Fedwire Funds provides real-time gross settlement.[17] FedNow processes instant payments around the clock.[18]

6. Software adapters

ActiveMerchant provides Ruby adapters for payment gateways.[15]

7. Related payment terms

Related account-entry definitions include credit and debit.

AVS and CVC are address and card-verification checks. Issuer support and the data collected affect the available results.[16]

Interchange is a fee between acquiring and issuing institutions under the relevant card arrangement.[5]

PAN means primary account number.[19] Replacing PANs with surrogate values is covered in payment tokenization. The PCI DSS entry covers payment-account data security. Nacha maintains US ACH rules.[20] See ACH. Republic Act No. 11127 is the Philippine National Payment Systems Act.[21]