What is eCommerce payment processing and how does it work?

Key takeaways

• eCommerce payment processing is a secure, online process that allows an online store to accept payments from customers 

• The process involves a digital payment travelling through a secure network of gateways, processors, card networks, and banks to authorise funds in seconds.

• Airwallex’s eCommerce payment solutions cut conversion and cross-border fees by letting you settle like-for-like in 20+ currencies and manage global operations in one place.

Aussie shoppers spent a record $82.6 billion online in 2025, as convenience and value-seeking behaviour drove a shift in retail habits¹. At the heart of this shift is eCommerce payment processing – the invisible engine routing money from your customer's device straight to your business account. 

Setting up a secure, cost-effective checkout doesn't just protect your sales. It protects your margins. In this guide, we’ll look at how eCommerce payment processing works so you can set up the best online payment system for your business.

What are the key components of an online payment transaction?

An online payment moves through four components: the payment gateway, payment processor, merchant account, and business account. Each plays a distinct role in getting money from your customer's card to your bank account.

• A payment gateway acts as the digital storefront terminal. It captures payment details, encrypts them, and sends them on. It's the secure bridge between your checkout and the financial networks.

• The payment processor is the behind-the-scenes engine that routes the encrypted details, communicates with card networks, and handles the transaction.

• Think of the merchant account as a temporary holding zone. Funds from approved sales sit here during the clearing phase while the banks verify the transaction details.

• Finally, you have your business account. This is your everyday operational home – where cleared funds land so you can manage team spend, pay bills, or buy inventory.

While traditional gateways require you to set up a separate bank-issued merchant account, modern platforms combine these features into a single integrated solution.

How does eCommerce payment processing work, step by step?

eCommerce payment processing moves through six steps – checkout, authorisation, authentication, approval, clearing, and settlement – all completed within seconds.

Step 1 – Checkout and submission

Your customer enters their card or digital wallet details at your online checkout. Your payment gateway instantly captures and encrypts this data to keep it safe from prying eyes.

Step 2 – Authorisation request

The gateway routes the encrypted details to your payment processor, which sends the request to card networks like Visa, Mastercard, or American Express. These networks identify the customer's bank and pass the request along through a technology called credit card processing.

Step 3 – Authentication and fraud checks

The customer's bank receives the request and performs quick checks to confirm the card is valid and has enough funds. This is where automated security protocols, like 3D Secure, run multi-factor checks to confirm identity and prevent fraud.

Step 4 – Approval relayed back

The bank sends its decision back through the processor and gateway to your website checkout. Your customer sees a "success" or "declined" message on screen, all within seconds.

Step 5 – Capture and clearing

At the end of the day, you batch your approved transactions. The processor works with card networks to move funds from the customer's bank to your acquiring bank.

Step 6 – Settlement into the business account

Funds land in your business account, typically one to three business days later. If you're selling internationally, traditional banks will force a currency conversion at this point, eating into your margins. Airwallex lets you skip forced conversions with like-for-like settlement in 20+ currencies.

How to choose the best eCommerce payment processing platform

The best eCommerce payment processing platform balances strong security, transparent pricing, fast settlement, and room to grow without trapping your cash flow in slow clearing cycles. Choosing the wrong one does more than push up your transaction bills; it can hurt your conversion rates too.

Security features

Look for PCI DSS compliance, tokenisation, and customisable fraud tools. Your platform needs to spot risk without blocking real buyers.

Cost

Keep an eye on the Merchant Discount Rate (MDR) and hidden FX markups. MDR is the fee merchants pay to a payment processing company on debit or credit card transactions, typically 1–3% of the transaction amount. This is different from the interchange fee.

Usability

Choose a provider that has a platform that offers what you’re looking for in terms of usability. For example, if you want to get up and running quickly, choose from one offering pre-built checkout templates, clean developer APIs, and simple plugins – not one that requires weeks of custom code.

Payment method availability

You can increase conversion by offering payment method choice to consumers. For Australian customers, your checkout should offer credit cards, debit cards, Apple Pay, Google Pay, and depending on your store, bank transfers. If you sell globally you will need to consider other alternative local payment methods.

Multi-currency access

Multi-currency support is important to consider, and not every platform offering more than one currency does so in the same way. Consider whether they let you settle currencies like-for-like by giving you local banking details in multiple countries. You can also look for a provider that lets you hold and convert funds at competitive interbank rates. If you sell overseas, you need a setup that accepts foreign currencies like a local.

AI features

Modern platforms use AI to protect your checkout and optimise transactions. AI-driven routing and automated retries help rescue declined transactions before you lose the sale. Consider features such as built-in fraud detection, automatic currency conversion, and adaptive success rate optimisation. 

Settlement speed and methods

Make sure your platform offers fast clearing cycles and same-day payouts. Cash flow is the lifeblood of any growing business, so you don't want to be left waiting for funds.

What payment methods should your online store accept in Australia?

Your online store should accept credit and debit cards, mobile wallets like Apple Pay and Google Pay, and modern bank transfer options like PayTo – reflecting how Australians actually pay. Forcing customers onto their non-preferred method is an easy way to lose the sale.

According to the RBA’s 2025 Consumer Payments Survey², debit cards remain the most popular payment method in Australia, accounting for around half of all consumer payments, with credit cards making up close to a quarter.

How much does eCommerce payment processing cost?

eCommerce payment processing costs come from five layers: the Merchant Discount Rate, interchange fees, scheme fees, processor markups, and cross-border currency conversion. It's easy to focus on a single headline fee, but these layers add up quickly if you're not paying attention.

Here are the main charges you'll see on your statement:

• Merchant Discount Rate (MDR): The total percentage fee you pay to accept card payments.

• Interchange fees: A fee paid by your bank to the customer's bank.

• Scheme fees: Small fees paid directly to Visa, Mastercard, or eftpos for using their networks.

• Processor markups: What your payment platform charges to handle the transaction.

• Cross-border currency conversion: The biggest hidden margin killer. If you accept a USD card, traditional banks can charge a 2% to 4% markup to convert those funds to AUD.

From 1 October 2026, card surcharges on Visa, Mastercard, and eftpos will be banned³. American Express has separately announced it will also prohibit surcharging from 1 October 2026 – though as a closed-loop network, it is not covered by the RBA's reform.You'll no longer be able to pass card processing costs directly to customers as a surcharge, which makes finding a low-cost, transparent payment setup essential.

Here's how standard payment methods compare on typical merchant cost:

Why businesses choose Airwallex for eCommerce payment processing

Businesses choose Airwallex because we keep your cross-border costs low, speed up settlement, and combine payments, global accounts, and cards in a single platform. Expanding globally shouldn't mean losing up to 4% of your international sales to bank markups and forced conversions.

With Airwallex Payments, you can accept global payments at competitive rates. We support major card schemes – Visa, Mastercard, and Amex – along with 160+ local payment methods.

Here's how we help you scale:

• Collect globally, settle locally: Collect payments in 130+ currencies across 180+ countries, and settle like-for-like in 20+ currencies into your Global Account. If your customer pays in USD, you keep it as USD – no forced conversions, no wasted fees.

• Reduce card decline rates: Our local card acquiring processes transactions directly on local card networks, reducing cross-border decline rates so more of your international sales go through.

• Cut your FX bills: When you do need to convert currencies, our rates sit at just 0.5% above the interbank rate for major currencies and 1% for other currencies. 

• Unite your systems: Sync your transactions with accounting software like Xero, NetSuite, QuickBooks Online, Sage, and Odoo to keep your books balanced without manual data entry.

• One platform: From the one dashboard you can accept customer payments and settle them in your Global Account, manage team spend globally with Corporate Cards, grow your idle business funds in USD and AUD with Yield, manage your business expenses, and more.

Traditional gateways operate widely recognised networks, but their transaction fees and forced conversions can add up on international sales. Airwallex gives you a complete financial platform – payment acceptance, global accounts, corporate cards, and Yield – so you can run your business from a single dashboard.

Frequently asked questions

What is the difference between a payment gateway and a payment processor?

The payment gateway captures and encrypts payment details, while the payment processor handles communication and movement of funds between banks.

How long does it take for online transactions to settle into a business account?

Settlement typically takes one to three business days, depending on the provider, bank clearing cycles, and transaction location.

Does my business need a separate merchant account to process online payments?

Traditional gateways require a dedicated bank-issued merchant account, whereas modern payment platforms bundle this into an all-in-one platform.

Sources

1. https://auspost.com.au/content/dam/ecommerce-report/australia-post-ecommerce-report-2026.pdf

2. https://www.rba.gov.au/publications/bulletin/2026/may/consumer-payment-behaviour-in-australia.html 

3. https://www.rba.gov.au/payments-and-infrastructure/review-of-retail-payments-regulation/2026-03/