Credit Card

Credit Card Processing Simplified

Credit Card Processing Simplified
MARINE CORPS BASE CAMP LEJEUNE, N.C. – Credit Card fraud costs cardholders and issuers hundreds of millions of dollars each year. Theft is the most common method of fraud but there are also other forms of fraud. A person could get a person’s credit card number and use it to by products on the card. (Official U.S. Marine Corps photo by Lance Cpl. Brandon R. Holgersen)

Are you still considering whether to accept credit cards payments for your business? It may seem like a lot of hassle, but once you learn how accepting payments through credit card can benefit your business, you might not want to look at any other payment option any time soon. Business owners who accept credits enjoy a multitude of benefits, including increased sales, efficient payments, and advanced security.

Given below is an overview of how credit card processing works to help you get a better understanding:

  1. Making the Purchase

The customer finds a product or service that he/she likes and decides to purchase it using their credit card to pay. Depending on the type of business, customers can choose to make the payment at the store, through an online credit card payment gateway, or by using their smartphone or tablet.

 

  1. Entering the Transaction

Credit Card Processing SimplifiedIf the payment is being made at the store, the credit card is swiped through a secure credit card processing terminal. For an online transaction, the cardholder opts for the relevant payment option.

 

  1. Transmitting the Data

The credit card terminal, POS system, or online payment gateway, is connected to the processing network which transmits credit card data for approval.

 

  1. Approve or Decline

Once the credit card data is transmitted, the credit card issuing company can choose to approve or decline the transaction. This depends on the availability of funds, validity of the card, and the transaction.

 

  1. Responding

If the card issuer approves the transaction, an authorization response is sent to the processor and the merchant.

 

  1. Completing the Transaction

The merchant completes the transaction.

 

  1. Submitting a Batch Closure

Transactions that have been processed in one day are closed with a batch closure. Then the processor’s acquiring bank collects funds from the credit card issuers.

 

  1. Depositing the Funds

Within 48 hours, the processor’s acquiring bank deposits funds into the merchant’s business account.

About the author

Willie DeJarnette

Just wanted to provide some basic knowledge of credit cards, credit score, and other credit types financial resources. Always trying to provide an understanding how to use credit cards and basically staying away from financial ruins.

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