Today’s payment system has become predominantly plastic. Cash and checks have given way to credit and debit cards. Credit Card Processing today allows for faster transaction times, easier tracking, and improved customer control; is it any wonder that more and more consumers are turning to plastic as the only way to pay. But what really happens when you swipe your card?
Checkout – Here is where it all starts. Whether you stand in line at Walmart or you select your shopping cart at Amazon, the first step is always the same. Before there is a credit card transaction, there must be a sale initiated. At checkout, the teller compiles your purchase, calculates the total, and you provide either a physical card or the card information (mostly for online purchases) so that credit card processing can begin.
Authorization request – Here is where things get a little tricky. After your card has been swiped or the information has been entered, the merchant sends an authorization request to the Acquirer. The Acquirer is a middle-man company that then takes your information and forwards the authorization request to the proper credit/banking institution for credit card processing.
Authorization response – Once they receive an authorization request, the card issuer (your bank or credit card company) checks the appropriate account and sends back a response either approving or declining the transaction. The Issuer sends their response to the Acquirer, who in turn forwards it to the merchant.
Transaction concluded – Once the merchant receives a response, they complete the credit card transaction accordingly. If the transaction has been approved, the sale is finalized and you take your merchandise. If the sale is declined, you either provide alternate means of payment, or go without.
Transaction altered – After a set period of time, the merchant goes back and batches credit card processing transactions. At this point, any alterations to the charge (i.e. tips) are added and the charge is concluded. The complete information is forwarded to the Acquirer, who then forwards it to the appropriate Issuer. At this point, the transaction is finished, and you will see it next on your monthly statement.
Those the basics of how credit card processing works. Read our Ins & Outs of Credit Card Processing Rules and Regulations  page to get a better understanding of the rules and regulations involved in our industry or read News from our Industry.
For Merchants looking for Credit Card Processing solutions, Call Us at (877) 410-8447 or fill out our Contact Us form for more information. Switch & Save!