How does the transaction process work?
From the time a business accepts a consumer payment to the time the business is paid, the process entails a number of steps. For this example, we will follow a credit card transaction. • Cardholder makes a purchase and the business records the card information, either by swiping it in a Point-of-Sale (POS) terminal, using a card imprinter, virtual terminal or by manual entry. The information is transmitted to a card acquirer such as First National Merchant Solutions. • In order to send that transaction from the merchant’s POS to the issuer for approval and then later for posting to the cardholder’s account, the acquirer usually enlists the help of an authorization vendor. • The acquirer sends the transaction to a card association. • The card association submits the transaction to the credit card issuer. • The credit card issuer pays a card association. • The association pays the acquirer. • The acquirer pays the merchant. • The card issuer sends the billed amount to the cardholder on t
Step 1: Cardholder presents a card to pay for a purchase. Step 2: Merchant processes the card and transaction information, and requests an authorization from the merchant bank. Step 3: Merchant bank submits the authorization request to Credit Card Network (Visa or MasterCard). Step 4: Credit Card Network sends the request to the card issuer. Step 5: Card issuer approves or declines the transaction. Step 6: Credit Card Network forwards the card issuer’s authorization response to the merchant bank. Step 7: Merchant bank forwards the response to the merchant. Step 8: Merchant receives the authorization response and completes the transaction accordingly. Click here for a visual description.
