eCommerce payment processing: What is it and how does it work?

Online retail continues to grow at a rapid pace, with Australian consumers spending a record $69 billion online in 2024¹. The thriving space offers businesses of all sizes a major opportunity to reach new customers and drive sales. Whether you're launching a new eCommerce store or expanding an existing one, getting your payment processing right is a critical part of building a trusted, efficient shopping experience that keeps customers coming back.

Choosing the right payment solutions provider can have a direct impact on your bottom line. Our research found that 77% of consumers are likely to abandon their cart if their preferred payment method isn’t available. 

This guide is here to help you understand eCommerce payment processing, including how payment systems work, comparing different provider options, and giving you the tools to choose a solution that fits your business goals and your customers' needs.

What is eCommerce payment processing?

eCommerce payment processing allows businesses to accept payments from customers. It works by securely sending customer payment details – from credit cards, debit cards, and digital wallets – between the customer's bank and the merchant's bank. The process involves verifying the customer's payment, getting approval for the transaction, and finally, moving the money from the customer to the merchant.

How does eCommerce payment processing work?

There are a few steps involved in eCommerce payment processing, from the customer’s initial purchase on an online store to the final transaction settlement.

1. The customer places an order

The process begins when the customer navigates to an online store, selects products or services, and proceeds to the checkout to complete the purchase.

2. The customer initiates a payment

The customer enters their payment information, such as credit card details and other relevant information at the point of sale such as an eCommerce website or mobile app.

3. SSL technology encrypts and sends payment information

The customer's browser transmits data securely to the payment gateway, which bridges the customer, business, and payment processor.

4. The payment processor sends the information to the merchant’s bank

The payment processor receives the transaction details from the payment gateway and validates the information. It then forwards the transaction details to the acquiring bank, or merchant bank.

5. The payment processor requests authorisation from the customer’s bank

The payment processor sends the information to the customer’s bank for authorisation. This step verifies the transaction and the availability of funds.

6. The customer’s bank approves or declines the transaction

Once the customer's issuing bank receives the authorisation request, it decides on whether to approve or decline the transaction based on factors such as funds availability and risk. 

7. The customer’s bank sends its authorisation response

The customer’s issuing bank indicates whether the transaction is approved or declined by sending a response back to the payment processor. The payment processor then relays the response to the payment gateway, which notifies the merchant's website of the transaction's status.

8. The merchant fulfils the order

If the transaction is approved, the merchant processes the order, prepares the products for shipping or delivers digital goods, and notifies the customer of the successful purchase.

9. The payment processor initiates the settlement process and transfers the funds

At the end of the day or a specified period, the payment processor initiates the settlement process. It transfers funds from approved transactions from the customer's bank to the merchant's bank account.

10. The business and customer receive transaction records 

Transaction details, including authorisation codes, payment amounts, and customer information, are stored for accounting purposes. Merchants can access these reports and reconcile payments with their sales records. Both the business and customer receive transaction records, such as receipts or account statements.

Popular eCommerce payment processing methods in Australia

The main types of eCommerce payment methods in Australia are credit and debit cards, digital wallets such as Apple Pay, BNPL, bank transfers, and crypto payments.

• Credit and debit card payments: Credit and debit cards remain popular payment methods for online transactions due to their convenience and security. The credit card transactions market is projected to exceed US$20 trillion by 2029, growing at a 6.46% annual rate². 

• Digital wallets: Digital wallets are rapidly gaining market share, especially in Australia. Data from the Australian Banking Association shows consumers made $160 billion worth of payments with their mobile wallets in 2024, a 28% increase YoY³.

• Bank transfers: Mainly seen in B2B transactions, bank transfers involve a customer manually transferring funds to a business for a purchase. Bank transfers remain an important payment method, especially for high-value transactions and in regions with less developed card infrastructure, but they face headwinds from the rise of real-time payment systems and alternative payment methods.

• Cryptocurrency payments: Cryptocurrencies offer the promise of fast, cheap, and borderless payments, but volatility and regulatory uncertainty remain challenges to mainstream adoption. 

• Buy Now, Pay Later (BNPL) services: Interest-free payments offered by BNPL platforms such as Afterpay and Zip offer flexibility and convenience, making BNPL popular for online shopping. By 2025, projections indicate BNPL will account for 5.3% of global eCommerce payments, up from just 2.9% in 2022⁴.

How secure are eCommerce payment processors?

Payment processors are often embedded with features that let you accept payments securely, including SSL certificates and 3DS, and adhere to global standards including PCI and DSS.

Secure sockets layer (SSL) certificates and Payment Card Industry Data Security Standard (PCI DSS)

An SSL certificate encrypts data between a customer's browser and a website, such as payment details. 

Merchants and payment providers have to adhere to global standards, such as the PCI DSS. Although not legally required, major credit card companies still require organisations that process, store or transmit card information to implement these standards. Non-compliance can result in financial penalties, restrictions on card processing capabilities, and reputational damage.

3D Secure and authentication

3D Secure, also known as 3DS, adds an extra layer of authentication to online payment transactions. By requiring users to verify their identity via a one-time passcode, redirection to the bank's authentication page, or biometric methods, 3D Secure significantly reduces the risk of fraudulent or unauthorised purchases.

​​How to choose the best eCommerce payment processor

When choosing an eCommerce payment processing provider for your Australian business, consider scalability and customisation, security protocols, settlement speeds and integration capabilities.

Scalability and customisation

When expanding globally, choose a scalable and customisable payment solution that will support your business growth ambitions. Good payment solutions maintain security, integrate local payment methods, comply with regional regulations, and offer multi-currency support.

Robust security protocols

Payment fraud can be incredibly expensive, so your business can’t afford to not prioritise payment security. Look for payment solutions that employ secure payment measures and technologies such as encryption, tokenisation, and authentication. They should also comply with relevant industry standards such as PCI DSS.

Speed of settlement

Speed directly impacts customer satisfaction and business operations. Faster payment processing leads to improved customer experiences and faster cash flow. Opt for a payment processor that delivers features like instant settlement to local bank accounts, and automated reconciliation to optimise your payment processing speed and efficiency.

Agile integration capabilities

Choosing an eCommerce payment provider means considering integration with existing systems. This can range from custom development to using plugins and APIs. Providers that handle integration offer faster, simpler implementation with less technical effort from you. They also reduce risk by managing PCI compliance and fraud prevention.

Examples of eCommerce payment service providers in Australia

There are quite a few eCommerce payment service providers in Australia, with prominent examples including Airwallex, Stripe, Shopify and PayPal.

Payment service providers (PSPs) facilitate electronic transactions between customers, businesses, and banks and may include both eCommerce payment gateways and payment processing services.

Airwallex

Airwallex, a payment solution provider or PSP,  is ideal if you’re looking to expand your global reach and are looking for seamless integration. Our platform supports multiple currencies and offers robust security features for safer transactions and fraud prevention. Airwallex also provides a user-friendly interface and various developer tools for integration into existing systems.

HSBC

HSBC, a leading global bank, is an acquirer which offers secure and efficient payment solutions through innovative technologies and digital platforms. HSBC facilitates both domestic and international transactions while ensuring regulatory compliance.

Stripe

Stripe is a payment facilitator (payfac), enabling businesses to accept payments without establishing their own traditional merchant account.

Shopify Payments

Shopify Payments is integrated directly into the Shopify platform and offers a streamlined payment processing solution for Australian businesses. It allows merchants to accept various payment methods, including major credit cards, without needing a third-party payment gateway.

PayPal

PayPal is a widely recognised eCommerce payment provider allowing Australian merchants to process transactions securely from a large customer base. It supports various payment methods, including credit cards, debit cards, and PayPal balances.

Why use Airwallex as your eCommerce payment provider?

Our financial platform, Airwallex, can be a great solution for your online business. As a payment service provider, we’ve established partnerships with acquirers and ISOs worldwide to offer a single platform for global payment processing. With Airwallex, merchants and businesses can manage their transactions easily, access different currencies, and obtain or lock competitive exchange rates. 

Here's how Airwallex can support your eCommerce business:

• Supports 130+ currencies with localised payment options in 60+ countries

• Delivers a wide range of cross-border payment methods

• Offers secure transactions with 3DS risk engine, SOC 1 and SOC 2 certifications, and PCI DSS compliance

• Integrates with major eCommerce platforms like WooCommerce and Shopify

• Offers transparent and competitive pricing

Sign up for an account or watch the demo below to learn more.

Frequently asked questions

What are the top features for an eCommerce payment process provider?

The top features for an eCommerce payment process provider include robust security protocols, multiple payment options, ease of integration, and exceptional customer support.

What are some of the best eCommerce payment providers in Australia?

The best eCommerce payment providers depend on your business needs and goals, but include the following:

• Adyen

• Airwallex

• GoCardless

• PayPal

• Shopify Payments

• Worldpay

• Revolut Business

How much does an eCommerce payment process cost?

The cost of an eCommerce payment process varies depending on the provider, the supported payment methods, and transaction volumes. Compare pricing structures and transaction fees to identify the most suitable option for your business that aligns with your financial goals and operational needs.

What are the key steps in an eCommerce payment process?

• The customer initiates the payment.

• The payment gateway encrypts the data.

• An authorisation request is sent to the payment processor.

• The bank or card issuer approves or declines the transaction.

• The transaction is completed on the merchant's website.

• Funds are transferred to the merchant's account.

Sources

1. https://ecommerce-report.auspost.com.au/ 

2. https://offers.worldpayglobal.com/rs/850-JOA-856/images/ENGPR2022.pdf 

3. https://www.ausbanking.org.au/wp-content/uploads/2025/07/252903-Bank-on-It-Report-2025-ART_compressed.pdf 

4. https://www.gartner.com/en/sales/trends/future-of-sales

Disclaimer: This information doesn’t take into account your objectives, financial situation, or needs. If you are a customer of Airwallex Pty Ltd (AFSL No. 487221) it is important for you to read the Product Disclosure Statement (PDS) for the Direct Services, which is available here.