The Card Payment Process

  1. End-customer makes a card payment with Merchant (subscription company using Billsby) and the details of the payment are sent to the payment gateway.
  2. Payment gateway will encrypt the customer’s card data and send the authorisation request to the payment processor - sometimes the payment gateway themselves are also the payment processor, this is the case for Stripe. However, sometimes the payment gateway and the payment processor are different entities, this is the case for as they use payment processors such as WorldPay for this step in the payment process.
  3. The payment processor then forwards the payment request to the card association used in the transaction, such as VISA or Mastercard.
  4. The card association then sends the payment request to the issuing bank. This is the bank that issued the card (customer’s bank).
  5. The issuing bank will either accept or decline the transaction, and send this response back to the card association.
  6. The card association then sends the bank’s response to the payment processor.
  7. The payment processor then sends the response to the payment gateway.


If the payment has been accepted, a hold is placed on the money. This is when the merchant gets the confirmation that the payment has been authorised and the customer can receive their goods and/or services. The funds can take up to two days to reach the merchant’s merchant account where all payments received from customers are first settled. Once settled the funds can be transferred from the company’s merchant account into their business bank account.


If the payment is rejected, the payment gateway will inform the merchant that the payment was not authorised and the merchant will either deny the foods and/or services to the customer, or will reattempt the payment.

Who is the end-customer?

The end-customer, or sometimes referred to simply as the customer, is the person purchasing the good or service from the subscription provider.

Who is the Merchant?

The merchant, is the company or business involved in the transaction.

This is you and your subscription business. When your customer pays for your service they’re paying the merchant.

Payment gateway

The Payment gateway is a software that handles an online transaction and securely sends the customer’s payment information relevant parties when a payment is attempted.

They are the service that authorises credit card payments for online and offline businesses. It is the equivalent of a physical point-of-sale (POS) terminal in a shop or restaurant. It lets your customer submit their credit card details and then securely passes this information from the customer to the merchant and then between the merchant and the bank.

Billsby integrates with payment gateways and works on top of them. Allowing customers to checkout an initial subscription, and then initiate re-occurring transactions (renewals).

Billsby supports integrations with the following payment gateways:

  • Adyen
  • Braintree
  • CloverConnect
  • NMI
  • Payment Cloud (via
  • Stripe

Payment processor

The payment processor is the entity that works towards authorising the transaction. They are a mediator between the merchant and any banks involved. Put simply, the payment processor communicates information from the customer’s card to the merchants bank and the customer’s bank.

Some payment gateways are also payment processors, whereas others use external payment processors as part of their service. All of the gateways that Billsby supports, include the payment processor functionality.

Payment gateway Vs Payment processor

The difference between payment gateways and payment processors, is that the gateway captures and sends the customer’s card data, where as the processor authorises the transaction.

Card association

A card associated (sometimes called a card network) is the organisation that facilitates and regulates the payment card transaction. You’ll be very familiar with these as they are the customer’s card type, e.g. VISA or Mastercard. The card association communicates directly with the bank that issued the card (the customer’s bank) and ultimately stores the customer’s funds.

Issuing bank

The issuing bank is the bank that issued the customer’s card. Essentially they’re the customer’s bank and have control over the customer’s funds.

Merchant account

A merchant account is a type of bank account that allows businesses to accept payments via debit or credit accounts. When funds from a payment are received from a customer, they’re temporarily held here before they’re able to be deposited into a company’s business bank account.

Payment gateways are often confused with merchant accounts, but these are not the same thing. You need both a payment gateway and a merchant account to be able to start taking payments online. Some gateways do however, offer merchant accounts as part of their service.

Here’s a breakdown of how Billsby’s payments gateways offer this service:


When a customer signs up to an Adyen account, they’ll be provided with a company account and one to several merchant accounts. The company account will hold all of the customer’s merchant accounts, users and monthly invoices.

You can find out more by visiting Adyen’s account structure documentation. offer merchant accounts and payments gateways as an all-in-one solution. They also allow customers to use their gateway service with an external merchant account if they choose.

You can find out more by visiting’s payment gateway documentation.


Braintree will provide a merchant account as part of their payment gateway solution. They also allow customers to use their gateway service with an external merchant account if they choose.

You can find out more by visiting Braintree’s Get Started documentation. 


CloverConnect offers merchant accounts as part of their payment gateway solution.

You can find out more about the services they offer by visiting CloverConnect’s merchant services and accounts types page. provides merchant accounts as part of their core payments platform, which also includes their payment gateways functionality.

You can find out more by visiting’s merchant account blog.


IXOPAY does not provide customers with a merchant account when they sign up to use their gateway services. Customers will be required to have a contractual agreement with an acquiring bank or PSP that provides merchant accounts to be able to use IXOPAY.

You can find out more by visiting IXOPAY’s FAQs.


NMI offers both merchant accounts and gateway services as part of it’s payment facilitator technology.

You can find out more by visiting the NMI homepage.

Payment Cloud (via

Payment Cloud provide a merchant account as part of their payment processing solution.

You can find out more by visiting the Payment Cloud homepage.


Stripe provides merchant account functionality as part of their payment gateway solution. Stripe does this using the payfac model. This model extends all the functionality of a merchant account to merchants, without requiring them to go through the process of acquiring their own individual merchant account. Instead, the payfac has a master merchant account that it uses to process payments for all the “sub-merchants” in its network.

You can find out more by visiting Stripe’s merchant account documentation.

Business bank account

The business bank account is the merchants bank account. This is where funds are sent after being deposited into the merchant account.

Merchant account Vs Business bank account

The two major differences between a merchant account and a regular business bank account are how the account is used and who operates and maintains the account. A merchant’s regular business bank account, which the merchant’s bank or credit union owns, is the account from which they can send and receive payments related to every aspect of business operations: paying employees, paying rent on retail spaces, paying for their website, etc. A business bank account is used in the ways we typically associate with a standard bank account.

Merchant accounts, on the other hand, are used for just one purpose: holding funds from a customer sale immediately after the transaction is complete and moving these funds to the merchant’s primary business bank account. Merchant accounts are not bank accounts from which payments are issued (other than moving funds into the main business bank account).