System and method for electronic payment

Processing an online payment transaction, preferably using a temporary account number (VAN), comprises initiating a transaction 110 with a merchant 8, an authorisation entity 12 e.g. the issuer bank, issuing an account number 108 and authorising a payment with a transaction processor 16, an escrow account 202 controlled 230 by the transaction processor holding or receiving an advanced fund associated with the transaction. The escrow account may have first 206 and second 208 subaccounts, the advanced fund being transferred 225 from the first to the second account prior to initiation of the payment transaction e.g. on deciding to make a booking and/or on a predetermined schedule. An account intermediary 6 e.g. a travel company may act on behalf of an end customer 4 and be associated with first subaccount 206 held on trust by escrow provider 204, the customer 4 being able to make deposits 212 associated with a pre-funding reference 214 provided by intermediary 6. The second subaccount 208 may be associated with the transaction processor 16, which can withdraw funds. The subaccounts 205, 208 may be provided by the same or separate providers. Thus the transaction provider has direct access to the funds in the escrow account and does not require collateral from the issuing bank.