Additional parameters, including the card's country of issue and its previous payment history, are also used to gauge the probability of the transaction being approved.
In 1972, the first Automated Clearinghouse[8] (ACH) association was formed in California in response to bank industry concerns that widespread check usage would outpace the technology needed to process them.
ACH became the primary method of electronic funds transfer[9] (EFT) for agencies, businesses, and individuals to pay or collect money online, and is still commonly used today.
Other technologies that are vital to the payment ecosystem are data security systems and processes, automated functionality, and customer engagement tools.
Due to the many regulatory requirements levied on businesses, the modern payment processor is usually partnered with merchants through a concept known as software-as-a-service (SaaS).
[16] Liability for misuse of credit card data can expose the merchant to significant financial loss if they were to attempt to manage such risks on their own.
[17] Some payment processors also specialize in high-risk processing for industries that are subject to frequent chargebacks, such as adult video distribution.
The typical network architecture for modern online payment systems is a chain of service providers, each providing unique value to the payment transaction, and each adding cost to the transaction: merchant, point-of-sale (PoS) software as a service (SaaS), aggregator, credit card network, and bank.