1. Cardholder (i.e. customer), either through a digital platform or directly, communicates his or her offer to purchase an item (i.e. goods and/or services) to the merchant (i.e. seller). Typically, the customer also inputs their card details for payment at this point.
2. After receiving the customer’s offer to purchase, the seller initiates an authorisation request that will be passed onto the card issuer (i.e. customer’s bank). Customer’s bank will confirm the authorisation and revert to the seller.
3. Once the seller receives authorisation [i.e. the time of supply/taxation for the purposes of the VAT/GST collection under the full VAT/GST liability regime], the seller accepts customer’s offer to purchase and delivers goods and/or services - the customer’s bank will place a hold on the amount of the purchase on the customer’s account. Concurrently, the seller will notify the digital platform of the confirmation of payment. The digital platform will also further pass on this confirmation to the customer.
4. The seller initiates the collection request. Customer’s bank transfers the funds to the merchant’s bank account. Subsequently, the customer’s bank will debit the transaction amount to the customer’s bank account.