Credit Card Processing
Sometimes credit card processing can be a confusing thing to understand. This process involves with many steps and many parties. Therefore, one can easily misunderstand the whole process of credit card processing. It is always a great idea to get to know how the credit card processing works in order to know your position as a consumer and a customer. Let’s have a look at the steps involved in this process.
There are a few participants in the process. Let’s try to understand who they are and what they do.
The customer is the one who uses the credit card in order to pay for something he or she just bought. The customer may have obtained this credit card from one of the banks that offers credit cards. Customer’s credit card may be originally issues by Visa, Master Card, Amex, or a similar entity. The banks are authorized to issues these credits cards to their customers.
The merchant is the one who uses a credit card machine to charge the customer who is paying through a credit card. The merchant should have two things in order to make the credit card processing; a credit card machine and a merchant account. The merchant should talk to a bank or an issuing body to obtain a merchant account. Although it takes only a couple of days to get a merchant account, sometimes it may take longer than that. Therefore, the merchant should start getting the merchant account in advance to the commencement of his business.
The payment gateway is what the merchant uses for credit card transactions. The payment gateway to the merchant is provided by the bank or the financial institution. Whenever the merchant performs a transaction, the transaction details are sent through the payment gateway to the bank which issued the customer’s credit card. Therefore, every merchant is supplied with one payment gateway for the credit card transactions.
The bank issued the customer’s credit card is the next important participant of the credit card processing. This financial institution is authorized by the credit card body (Visa, Master Card, Amex etc.) to issue their credit cards to the customers of the bank. The bank issues the credit cards to their customers under the supervision and authorization of the credit card bodies. Once the merchant enters the credit card details of a customer through the credit card machine, this information is sent to the credit card issuing bank for verification. If the card is valid and it has sufficient funds to complete the transaction, then the issuing bank send a positive message to complete the transaction in credit card processing. If things are not right, it declines the credit card processing and sends a respective message.
