How Does Online Card Payment Work In Nigeria?

January 29, 2020

I spent the last two days reading about how online payment platforms work in Nigeria. Why am I so jobless you ask? I’ll explain later.

But first, if you don’t already know how card payments work, here’s the gist:

Disclaimer: This is not meant to be an authoritative guide. It’s a framework to understand what happens.

Every time “enter your card details”, how does it even work self?

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First three things to know: Your bank, online payment service provider, and the financial institution of the company you are patronizing.

So, you decide to buy your power bank from Big Cabal electronics. They also don’t like stress and they want you to pay from the comfort of your singlet and boxers. To make both your lives stress-free, they employ the service of a payment service provider to collect the money online.

Payment service providers are like the guys who collect money from yellow buses for the NURTW but without the violence. They help businesses safely receive online payments.

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Payment service providers are circled.

So, when it’s time to pay, you fill in your card details in the payment service provider’s form which is located on the seller’s check out page.

Ahan. Just like that. Is it safe?

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Immediately after you fill the form, the service provider encrypts your details. Encryption is like when the smart student covers her work so we can’t copy from her in the exam. So, no one can see your details. It’s safe.

What next?

Remember when your bank people were pursuing you to collect visa or master card? or in some cases, verve card? Well, these people(master card, visa) work in partnership with banks and are in charge of issuing payment/A.T.M cards to us. So, the online payment provider sends in the covered details to these card issuers.

Because these issuers are besties with banks, they then forward the covered details to your bank for authorization. Your bank will tell them whether you can afford to pay for it or not.

How much are you having in your account?

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For subsequent transactions, this whole process will be restarted from scratch as this covers only one transaction.

But…but…how does Big Cabal electronics get their own money?

After your bank says “let my people go”, Big Cabal delivers your power bank to you. You no longer miss any gist and your devices are always charged.

Your own bank then deducts the money for the power bank from your account. Pay the deducted sum into the bank of the online payment provider and they, in turn, pay into Big Cabal’s bank. All this takes a total of 24 hours to be completed.

And they transacted happily ever after

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