Credit Card Transactions Processing

While there are many different methods out there for explaining the somewhat complicated steps of credit card transactions processing, we can help people understand the concepts by breaking them down into chunks – eleven, in this case – to explain and, we hope, to educate our clientele on the many factors contributing to the protocol of typical card transactions processing.

The following are the eleven basic steps for card transactions processing:

  1. Merchant calculates the sales price of the transaction, and then asks buyer for payment.
  2. Buyer presents merchant with a credit card for card transactions processing.
  3. Merchant runs credit card through the point of sale unit. The amount of the sale, required for card transactions processing, is either hand-entered or transmitted by the cash register.
  4. Merchant transmits the credit card data and sales amount with a request for authorization of the sale to their acquiring bank.
  5. The acquiring bank that performs credit card transactions processing routes the authorization request to the card-issuing bank. The card number identifies the type of card, issuing bank, and the customer’s account.
  6. If the cardholder has the funds to purchase, the issuing bank authorizes it, and generates an authorization code, sent to the acquiring bank.
  7. The acquiring bank doing the card transactions processing then sends the approval code to the merchant’s POS unit.
  8. A sales draft is printed out, which the merchant asks the buyer to sign, obligating them to reimburse the card-issuing bank for the sale.
  9. Later, the merchant reviews all the authorizations stored in the POS against the signed sales drafts. When the authorizations from card transactions processing have been matched with sales drafts, the merchant will transmit the data to the bank for deposit.
  10. The bank performs an interchange for each sales draft with the card-issuing bank. The bank transfers the amount of the draft, save for the interchange fee, to the acquiring bank.
  11. The acquiring bank then deposits the amount of the sales drafts submitted by the merchant, save for a discount fee, into the merchant’s bank account.

If you have any questions about card transactions processing, or if you would like to set up a credit card transactions processing package with Vision Payment Solutions, simply give us a call today at the number above.