What does Credit Card Processing Look Like?

Managers and business owners often are also smart consumers. You routinely assess the many products, services, and solutions needed to keep your company running smoothly.

Accepting credit cards allows you to be paid. It is important to select the right credit card processing company. Credit card processing services are essential partners beyond the core payment processing service. This makes them a crucial business decision. Not that you need to be an expert. However, you will be a better customer if you understand how credit card processing works.

We will examine the actors and their roles to understand how payment processing works.

What Are The Roles Of Credit And Debit Card Transactions In An Organization?

  • An issuance bank gives a cardholder a debit or credit card. The account can be used to pay for goods or other services.
  • Any business that accepts payment by card in exchange for goods and services is called a merchant.
  • A merchant bank sets up and maintains merchant banks. Merchant banks let merchants accept credit and debit card payments.
  • Credit and debit card processing companies. Card payment processors connect merchants with merchant banks, card networks, and others to make card transactions possible.
  • Credit unions and banks issue credit and debit cards through card associations to cardholders.
  • This card association includes Visa, MasterCard Discover, and American Express. The card associations are responsible for setting interchange rates and qualification standards and acting as a judge among acquirer banks.

What’s Credit Card Processing In Motion Like?

Three processes can be used for credit card processing:

  • Authorization
  • Settlement
  • Financial

Let’s take a look at authorization for credit cards and debit cards.

  • The Cardholder presents the card (swipe/tap, insert, or any other secure way, i.e., for goods or services, contactless payment, or entering the number for online credit card payment) to the merchant. The request can originate from a merchant or credit card terminal in a brick & mortar store or an eCommerce website gateway through mobile or In-App payment acceptance.
  • The merchant asks for authorization to be paid to their payment processor.
  • The payments processor sends transactions to the appropriate card association to eventually reach the issuing financial institution.
  • Authorization requests should be sent to the issuing banks. They must include parameters such as CVV validation and expiration dates.

That’s all there is to it about credit card authorization. The entire process of authorizing your credit card takes only seconds.

Now let’s examine the credit-card settlement and funding process. This is where the merchant gets paid out of the credit cards they accept.

  • Merchantssend bulk transactions to their credit card processors.
  • The transaction processor relays transaction information to the credit associations that transmit the appropriate debits to the issuing institutions.
  • The issuing banking charges cards for the transaction amount.
  • The issuing institution transfers the funds required for the transactions to the merchant bank.
  • The Merchant Bank deposits funds into Merchant Account.

Merchants are now able to get paid faster by having the settlement and financing processes completed within hours.

This is how you can pay for your credit cards quickly.

Connect with one of our payments experts to learn more about credit card processing. We’re happy for you to ask any questions and help you with the setup.

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