It's likely that your business runs a number of credit cards each and every day, but do you really know how it all works? Here is a quick, abridged run-down of the process for a typical retail-oriented payment system:
- The card is
swiped at the credit card machine/terminal and the information from the card is sent to the merchant credit card processor for authorization.
- Next, the information is forwarded to the bank who issued the card. The transaction amount is checked against the balance/credit authorization of the card and is either approved or declined, then sent back to the processor.
- The processor forwards the information back to the terminal, where the customer is able to sign the receipt if the transaction is approved.
- The final part of the transaction occurs at the end of the day when all of the transactions are settled by batching the terminal.
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