Online and blended learning have become common educational strategy in higher education. Lecturers have to re-theorise certain basic concerns of teaching, learning and assessment in non-traditional environments. These concerns include perceptions such as cogency and trustworthiness of assessment in online environments in relation to serving the intended purposes, as well as understanding how formative assessment operates within online learning environment. Of importance also is the issue of how formative assessment benefits both the student learning and teaching within pedagogical strategies in an online context. This paper's concern is how online formative assessment provides teaching and learning as well as how lecturers and students benefit from it. A mixed method questionnaire on formative assessment with a main focus on how formative assessment within online contexts operates was used to collect data from courses using Blackboard. Lecturers and students at a comprehensive university were the population. Various techniques for formative assessment linked with online tools such as discussion forums and objective tests were used. The benefits that were famous comprise improvement of student commitment, faster feedback, enhanced flexibility around time and place of taking the assessment task and importance in the procedure for students and lecturers also benefited with less marking time and saved on administrative costs. The crucial findings are that effective online formative assessment can nurture a student and assessment centred focus through formative feedback and enrich student commitment with valued learning experiences. Ongoing trustworthy assessment tasks and interactive formative feedback were identified as significant features that will deal with intimidations to rationality and trustworthiness within the milieu of online formative assessment.