How Zoho Payments Works
In simple terms, Zoho Payments takes care of getting the money from your customers and depositing it to your account. Before we see how that happens, here are the basics of the parties involved:
| Description | Details |
|---|---|
| Business | The party selling the products or services, in this case, you and your business (also referred to as merchants). You could run a physical or online store or any subscription business that allows customers to make payments online. |
| Customer | The party buying the product or service and is interested in making the payment online. |
| Card Network | The institution that provides cards to facilitate card payments. For example, Visa or Mastercard. |
| National Payments Corporation of India (NPCI) | NPCI is responsible for the operation and management of digital payments infrastructure, such as UPIs, BHIM and RuPay, ensuring secure and efficient online transactions. |
| UPI Apps | Unified Payments Interface (UPI) apps are mobile applications that allows users to make payments and transfers between bank accounts instantly. |
| Customer’s Bank | The financial institution in which your customer holds their bank or card account. (This is also known as the Issuing Bank.) |
| Business’s Bank | The financial institution in which your business has an account. (This is also known as the Acquiring Bank.) |
| Payment Gateway | The institution that helps authorise payments and move them from the customer to your business’s bank account, in this case, it’s Zoho Payments. |
| Merchant Account | The business’s account with Zoho Payments where funds are temporarily held before transferring them to your business’s bank account. Will be referred to as your Zoho Payments Account. |
How are payments processed?
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A customer places an order for a product online or buys a product in your store and they receive an invoice link to make the payment. The customer is redirected to the payment screen when they click Pay or Make Payment (or any similar button) in the invoice.
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The customer provides their card details, UPI ID, or net banking credentials on the checkout page where their details are encrypted by the payment gateway i.e., Zoho Payments.
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Card Payments: Zoho Payments passes this request to the card network and it is then forwarded to the customer’s bank. Meanwhile, the customer is taken to an authentication page rendered by the customer’s bank (issuing bank).
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UPI Payments: Zoho Payments sends the request to the customer’s UPI app requesting the customer to authenticate the transaction using their UPI PIN.
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Net Banking Payments: Zoho Payments redirects the customer to their bank’s internet banking page, where they can authenticate the transaction with their credentials.
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The payment gateway and processor runs a fraud check, and also ensure there are sufficient funds in the customer’s bank account to process the payment.
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When it passes all the above checks, the customer gets notified if the payment was a success. If it was declined, the reasons are displayed to the customer. Customers can choose to resolve the issue and retry the transaction to make the payment.
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The payment is then moved to your Zoho Payments Account where the payment is held temporarily. Then the amount is settled by Zoho Payments to your business' bank account in batches that you’ve chosen (payouts).
Insight: Customer data transmitted through Zoho Payments is secure as the data is encrypted and transmitted using advanced payment security standards. Zoho Payments is also Payment Card Industry Data Security Standard (PCI DSS) compliant software, so, your and your customers' data are in safe hands.
