June 20, 2024

What is Online Payment Processing?

Online payment processing is the method by which transactions are conducted over the internet, allowing for the electronic movement of money from a purchaser's to a seller's account. It is facilitated by payment processors that handle the various steps involved in authorizing and executing payments in a secure and efficient manner.

Payment processing involves several key parties including the merchant, customer, issuing bank, acquiring bank, and payment gateway, working in coordination to ensure funds are transferred while adhering to regulatory standards and security protocols.

How does tax compliance factor into online payment processing?

Tax compliance is a critical aspect of processing online payments, especially when dealing with workforce payments. Businesses must calculate and withhold the appropriate taxes for each transaction, considering the different tax jurisdictions and regulations that may apply.

Payment processors often offer solutions or integrations with tax compliance software to help businesses automate these calculations, report and remit taxes to the respective authorities, reducing the risk of errors and ensuring compliance with local and international tax laws.

Puzzl Group Inc. (Zeal) is a financial technology company, not an FDIC insured depository institution. Banking services provided by Bangor Savings Bank, Member FDIC. FDIC insurance coverage protects against the failure of an FDIC insured depository institution. Pass-through FDIC insurance coverage is subject to certain conditions.