A Beginners Guide to Credit Card Processing

What does it take to complete a credit card transaction? We break down who is involved in the process to help you, the merchant, understand.


Players
There are three main players when it comes to processing credit and debit card payments, whether online, via phone sales, or in person. On the one end is you, the business owner or merchant. On the other end is your customer. And in between is a lot of technology that connects the two.

‍
1. The merchant. 
In order to accept credit and debit card payments from customers, as a business owner, it’s likely you’ll need a merchant bank (sometimes called an acquirer) that accepts payments on your behalf and deposits them into an account they provide.
2. The customer.
 Similarly, in order for your customer to pay for your goods and services, they need a credit or debit card. The bank that approves them for the card (and lends them the cash to pay you) is called the issuing bank.
3. The technology. 
In the middle are two technologies that enable you and your customer to transact.
- The payment gateway. A software that links your POS or website’s shopping cart to the processing network.
- The payment processor (or merchant service), which does all the heavy lifting: moving the transaction through the processing network, sending you a billing statement, working with your bank, etc.
Authorization

The authorization process goes something like this:


1. The customer buys a good or service from you with a credit or debit card.
2. That information goes through the payment gateway, which encrypts the data to keep it private, and sends it to the payment processor.
3. The payment processor sends a request to the customer’s issuing bank to check to see that they have enough credit to pay for your stuff.
4. The issuer responds with a yes (an approval) or a no (a denial).
5. The payment processor sends the answer back to you that the sale was approved and also tells your merchant bank to credit your account.

All of the above takes place within a few seconds.
Settlement

The second piece of the process (where you get paid!) is the settlement:
1. The card issuer sends the funds to your merchant bank, which deposits the money into your account.
2. The funds are available.

 The settlement process can take a few days. Sometimes, your bank lets you access your money before it’s even sent to them. They also might keep a portion in your account that you can’t touch, just in case the customer returns things later (called a reserve in payments speak).



Now that you know who is involved checkout our post on Understanding Payment Processing Fees.

___
Sources Cited
PayPal "Breaking down the credit card processing fees"

Comments

  1. The best way to use a credit card is by using it only when you need it, and by charging only what you know you can comfortably afford to pay back. Most of the persons find it difficult to use an online transaction. I also find it difficult but when I send money by Noth Loop then I find it easy because it is easy to use and my money is transferred India to the USA within minutes.

    ReplyDelete
  2. Well, it’s a nice one, I have been looking for credit card. we provide fake id generator at affordable prices. for more info visit our website.

    ReplyDelete
  3. It is the valuable blog which you have shared here. and I’m satisfied with the information that you provide here and thanks for this. Get the best info about Best Way to Pay off Credit Cards visit at yofii.co

    ReplyDelete
  4. This blog explains and guides us about credit card processing. It is a gainful article for me and also for beginners to develop their knowledge, Thanks for share it. credit card offers for bad credit

    ReplyDelete
  5. You have Shared great content here about credit card. I am glad to discover this post as I found lots of valuable data in your article. Thanks for sharing an article like this.carding sites 2021

    ReplyDelete
  6. Nice information about credit card processing. If you want a fake credit card then generate it from the credit card generator .

    ReplyDelete
  7. The information you've provided is quite useful about bank interest rate information online Kenya. It's incredibly instructional because it provides some of the most useful information. Thank you for sharing that.

    ReplyDelete
  8. I am very thankful to you for sharing this best knowledge with us. This information is helpful for everyone. So please always share this kind of knowledge with everyone. Thanks. Read more info about Fast Loans

    ReplyDelete
  9. Your credit is bad. Perhaps you have a string of unpaid bills haunting your past. Maybe nanso cc you declared bankruptcy within the past 10 years, or defaulted on a student loan.

    ReplyDelete
  10. A very awesome blog post. We are really grateful for your blog post. You will find a lot of approaches after visiting your post. Slice invite code

    ReplyDelete
  11. Nice Content! I have read your blog and I gathered some needful information from your blog. Keep update your blog. Waiting for your next update. For more information visit this site: Chinese New Year 2022 Holidays

    ReplyDelete
  12. I read the above article and I got some knowledge from your article. It's actually great and useful data for us. Thanks for share it.Small Business Lenders

    ReplyDelete
  13. Very good information, thanks for sharing. Please check out my article about fire insurance policy where I discuss every helpful things in details.

    ReplyDelete
  14. I am attracted by the info which you have provided in the above post. It is genuinely good and beneficial info for us about Future Credit Card Sales. Continue posting, Thank you.

    ReplyDelete

Post a Comment

Popular posts from this blog

Understanding Payment Processing Fees

EMV "Chip" Compliant Processing