This article contains a video and step by step guide on how to understand payment statuses.
00:00: Creating a smooth payment experience requires understanding each step of the fund
00:04: flow. This video clarifies payment statuses, showing exactly where money sits at
00:09: any given moment for both pay-ins and payouts.
00:13: Payments follow a clear, structured hierarchy. A payment represents the top-level
00:18: fund flow, encompassing all money
00:20: moving to you or out as a payout.
00:22: This foundational understanding is crucial for tracking the overall financial
00:26: journey of any transaction.
00:29: Within each payment, you'll find various actions.
00:31: An action is a specific request- like authorizing, capturing, voiding, or refunding.
00:37: A single payment can involve multiple actions, each serving a distinct purpose in the
00:42: transaction lifecycle.
00:44: Each action
00:45: generates one or more transactions.
00:47: A transaction is the outcome of a single exchange with a payment scheme, like Visa
00:52: or Mastercard.
00:53: The final transaction in a sequence is critical, as it ultimately sets the overall
00:58: status of the payment.
01:00: Understanding these individual exchanges helps clarify the payment's journey.
01:05: Money moves through a series of distinct stages, beginning with authentication.
01:09: This first step verifies the identity of the person making the payment, confirming
01:14: they are the genuine cardholder or the legitimate account owner. Authentication
01:18: is essential for security and fraud prevention, ensuring only authorized people
01:24: can complete transactions.
01:27: Following authentication,
01:28: the next stage is authorization. Here, funds are reserved on the cardholder's account,
01:33: effectively reserving the amount for your transaction. This
01:36: reservation ensures that the money is available when you're ready to capture it,
01:41: providing
01:41: a temporary hold
01:42: on the funds.
01:45: After authorization, the capture stage begins. This is when the actual movement of
01:49: funds from the cardholder's account to your account starts. Capture finalizes the
01:54: transfer of the reserved amount, making the funds available to you.
01:58: This step is critical for completing the financial transaction.
02:03: The final stage in the money movement process is clearing and settlement.
02:06: This ensures that funds successfully move from the card issuer, through the payment
02:11: network, and ultimately into your available balance.
02:13: This multi-step process guarantees that each transaction is completed accurately and
02:18: securely, making the funds fully accessible.
02:22: When funds move to you, they typically follow a "happy path" of statuses.
02:26: Initially, a pay-in enters a pending state.
02:28: This means the system is actively waiting on the results of both authentication and
02:33: authorization processes.
02:35: The funds are in motion, but not yet confirmed or reserved.
02:40: Once authentication and authorization are successful, the payment moves to an
02:43: authorized status.
02:45: This means the funds are now blocked and reserved on the customer's account. While
02:49: the money has not yet moved to you
02:51: - it's
02:52: secured. You can still void an authorized payment to release this hold if needed.
02:57: The final step in the happy path for pay-ins is captured.
03:00: This status indicates that the money has successfully moved from the customer's
03:04: account directly to yours.
03:06: At this point - the transaction is
03:08: complete. If you need to return these funds to the customer, you would then have to initiate
03:12: a refund.
03:14: Sometimes, payments encounter reversals or stops. A voided status means that
03:19: authorized funds were released back to the customer before any money actually
03:23: moved. This can
03:24: happen if you requested the void, or if the authorization simply expired without the
03:29: funds being captured.
03:31: When captured funds are sent back to the cardholder, the payment status becomes
03:35: refunded. This action happens after the money has already moved from the customer to
03:40: your account
03:41: - and you then initiate a
03:43: return. Refunds are a common way to manage customer returns or cancellations.
03:48: A declined status indicates that the payment process stopped because either the
03:52: authentication or authorization step failed.
03:55: This means the transaction could not be completed, and no funds were moved or
03:59: reserved. Understanding the reason for a decline helps in troubleshooting and
04:04: resolving payment issues.
04:07: For Alternative Payment Methods or APM's, a canceled
04:09: status means the customer
04:10: actively stopped the transaction.
04:12: This usually occurs on the partner's page before the payment could be authorized. It
04:17: indicates the customer chose not to proceed with the payment at an early stage.
04:22: Another status for Alternative Payment
04:24: Methods is expired. This occurs when the redirect URL -which takes the customer to
04:29: the payment provider's page, expires
04:31: before the customer can complete the authorization. The payment cannot proceed
04:36: once this time limit is reached.
04:38: For Alternative Payment Methods,
04:40: a returned status means the payment provider,
04:42: not the merchant, returned the funds directly to the customer.
04:46: This can happen for various reasons specific to the APM and indicates the funds
04:51: did not reach your account.
04:53: Sending funds out to a destination, known as a payout, involves its own set of
04:57: statuses. This process
04:59: moves money from your balance to either a destination card or a destination bank
05:04: account. Understanding these payout statuses
05:06: helps you effectively track the outgoing flow of funds and manage your
05:10: disbursements.
05:12: When you initiate a payout, it first enters a pending state. This means the payout
05:17: is awaiting various internal processes, including threshold checks, screening, or
05:22: compliance requests.
05:24: The funds are in motion but not yet dispatched to their final destination, ensuring
05:29: all necessary verifications are completed.
05:32: From pending, payouts transition to either a paid or approved status.
05:36: A payout is marked as paid when successfully delivered to a destination card. For
05:41: bank accounts, the status becomes approved
05:43: once the funds are dispatched. Both statuses confirm the successful initiation of
05:48: the transfer to the recipient.
05:50: If issues arise during a payout, you might see a returned or declined
05:54: status. Returned means the bank sent the dispatched funds back;
05:57: you should check the return action in your timeline for details.
06:00: Declined indicates the scheme or bank rejected the payout,
06:04: meaning the funds were not sent at all. These statuses help you identify and
06:09: address payout failures.
06:12: Beyond standard one-time payments, your payment flow can involve advanced types and
06:16: additional actions.
06:17: Payment categories include regular cardholder-initiated transactions, CIT/MIT
06:20: for recurring payments, MOTO for mail or telephone orders, and AFT for account funding.
06:27: Additional actions like incremental
06:29: authorization, card verification, and payouts offer more flexibility in managing
06:34: funds effectively.
06:39: With a clear understanding of payment logic, you can now build robust solutions.
06:43: Explore the Payments API to trigger actions like captures, voids, refunds, and payouts
06:49: directly.
06:49: Additionally, set up webhooks to automate processes like shipping and fulfillment
06:54: the moment a payment status changes, ensuring real-time operational efficiency.
07:00: We've gone over the payment hierarchy, detailing how payments, actions, and
07:04: transactions define fund movement.
07:06: We also explored the lifecycle of pay-ins and payouts, from pending to captured or declined,
07:11: and reviewed advanced payment types. Using this knowledge with the Payments API
07:16: and
07:16: webhooks enables you to set up efficient, automated payment management.