Credit Card Processing Systems 101
Everything that happens with credit card processing systems in order for your transactions to take place may only take a split second, but it’s important to know the basics of credit card processing systems – especially if you’re a merchant or business owner. Let’s run through the processes of credit card processing systems in more detail, from the perspective of the customer; this will help you to understand, as a merchant, what credit card processing systems do to facilitate the sales that power your business.
The first step in any credit card processing systems is the card swipe. You swipe your credit or debit card through the payment terminal, which communicates with the merchant bank to determine whether you have the funds necessary to cover the transaction. The merchant bank then contacts your card network for authorization of the purchase, which then contacts the credit card issuer to ensure the card’s validity. The card issuer returns an authorization code for the sale. The merchant’s bank then approves your purchase, issues you a receipt, and you’re out the door.
After this all happens, your credit card has only been authorized for the payment – but not technically charged. If you access your card history online right after a purchase, the payment likely hasn’t even been posted. Some card issuers have reporting systems that display authorized transactions but more than likely, you might not get the charge for several business days.
At the end of his business day, a merchant sends all his card transactions for that day to his bank, which then transmits that data to the proper payment network for official processing.
The credit card network informs each issuer of payments due. A card issuer typically retains an interchange fee, according to its agreement with the merchant. Card issuers divide the interchange fee amongst the credit card networks with whom they conduct business.
The credit card network then transmits payment to the merchant bank – while of course collecting its own fee – and deposits the funds from the customers’ credit card charges into the merchant’s account. These are the basic principles of credit card processing systems today; of course, as in any such technical process, credit card processing systems vary from network to network.
Have any questions about credit card processing systems? Would you like to arrange one of the best credit card processing systems programs around? Then call Vision Payment Solutions today. We can arrange the ideal, customized credit card processing systems for your company, and get your payment processing up and running in no time.