How do online payment systems work?

Online payment systems are much simpler than they might seem. The system starts with the transaction, when the customer decides to purchase a good or service on the internet, using a credit card or other form of electronic payment. The credit card and payment information is then encrypted and authenticated by the gateway and processor. In the matter of just a few seconds, this encrypted information is then authorized and approved, and the sale is completed, upon which point the funds are then sent to the merchant account.