How does Electronic Payment Processing Work?
Posted by Jason Hachkowski on Mon, Jul 19, 2010 @ 03:14 PM
Electronic payments in Canada began in March of 1985 with TelPay’s first electronic payment transmission. Since that time electronic bill payments have grown in volume, and are slowly becoming as common as direct deposit payroll. However, that still does not answer the question of how electronic payments work?
First, we should examine the fundamental aspects of electronic payments. These would be debits and credits. In the world of electronic banking, a debit is used to indicate a deposit, or a “money in” transaction. A credit indicates an expense, or a “money out” transaction. This is how banks and other financial service organizations manage millions of transactions every day. A debit cannot be made without a corresponding credit and vice versa.
Electronic payments and the complex series of debits and credits which are “transmitted” between TelPay and its customers result in: bills being paid, direct deposit being made, and even transfers between bank accounts. When you use the TelPay system to send a payment to someone, the system marks that as a debit against your account, and as a credit towards the account you are sending a payment to. Likewise, when a supplier or business sends a payment to you, the TelPay system creates a debit against their account, and a credit towards your account.