Plastic is a word which is frequently used and plastic is the material which has wider implications in business world. Plastic means plastic money which offers you flexibility and bigger room to your pocket. It is important for all sized businesses to offer credit card services if you want to remain in the game. The two main rules of the game are Credit and Collection and for the interpretation of these regulations credit card processing is inevitable.
For a detailed insight of credit card processing, one must know the steps involved in processing. When a credit card is used, there are number of steps involved to make a transaction successful in few seconds time. When you avail any service or buy any product, the merchant enters authorization request with your consent. The request is sent through merchant's terminal which is hooked up through telephone, fax or Internet. In second step of credit card processing this request is sent to issuing bank. Now bank has to see whether account number is valid and the amount is transaction is not going beyond the credit limit of credit card offered by bank depending on certain criteria. A transaction is deposited and settled into your bank account.
The steps involved in credit card processing are not as simple as they are described. Any problem encountered at any level or step of credit card processing can be resulted in failure of transaction. Credit card processing has the two extremes, one is credit and other is collection. At one extreme, using credit card is in issuing authority's interest and at the other extreme, its collection is little bit challenging for it. So the issuing authority will be called intelligent one if it devices certain policies which are neither restrictive nor liberal. For this purpose a careful investigation is needed to be put in which will let the bank knows about the fraudulent who have the intention of either paying late or even not paying.
There are three ways through which you can judge the capability of customer to back debts. To ensure collection of debts, applicant is evaluated on the basis of his/her income and obligations. Based upon these two parameters a credit limit is defined for customer. The second way of evaluating credit card holder's capability is to see his/her credit history which shows whether he is willing to pay readily or not. The third way carries potential credit risk which suggests issuing authority whether to allot a credit card or not. If profitability of account is less than that of cost then bank will likely to decline submission. For credit card processing, banks would like to look for all possible options for credit and its collection.