Transaction Flow Of Credit Card Process

Transaction Flow Of Credit Card Process

Transaction Flow Of Credit Card Process

Online or offline business you cannot survive without accepting credit card payments. Credit card processing involves a step by step process which should be understood by every user of the card. It's a very simple transaction flow but involves lot of technology.

A simple ad easy to understand transaction flow of the credit card processing is briefed below.

Basically the credit card processing has 2 major stages involved 1) Authorisation and 2) Payment and settlement. When the buyer goes to a store and purchases products or services he will present the credit card as payment mode at the bill counter. Similarly in case of the online purchase the buyer will be required to fill out the form giving the credit card details. In case of the former the merchant will have to swipe the credit card. Sometimes he may even physically enter the credit card details into the terminal. This is the first step of the credit card processing. In case of online forms you will have to enter details such as the credit card number, date of card expiry, address, CVV number and the amount you ordered.

The authorization request will be sent immediately electronically by the merchant account to the credit card issuer of the buyer namely visa, master card or American express etc... When this request is received by the card issuer they will check the record. They will check for the following details- credit card number will be verified and matched with address, amount of order will be verified with the credit limit, credit card number and its expiry date will be verified and lastly it will check for the corresponding CVV number. They will either accept the transaction or reject them due to some mismatch in number etc. This response is received by the merchant account and then passes on this to the merchant at the counter. Then the merchant will process depending on the response received form the merchant account. All this happens in few seconds due to the advancement of technology and so credit card processing is done.

The second stage is the settlement stage. The money is immediately transferred to the merchants account and information regarding this transfer will be submitted to the credit card processing company via electronic media. The credit card processing company will then make the payment to the merchant and will debit the amount in the cardholder's i.e., the buyer's account. Information about this transaction will be sent to the cardholders issuing company. The card issuing company will include this in the monthly statement of the cardholder. They will also include other charges and fees applicable which will be paid by the card holder by the due date.

Understanding this credit card process is a must as a user of the credit card. It is a sophisticated banking process but knowledge about these will help you in better use of the credit card.

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