4 Steps to Show the Process of Credit Card Payment Processing

By CIOReview | Friday, November 15, 2019

The majority of people don’t think about the intricacies of electronic payments, as most of them are not needed. But automated payment systems like any other system is prone to technical glitches, human error, and malicious outsider attacks.  

Fremont, CA: There are five major parties to a typical electronic card transaction, the buyer, merchant, acquirer, issuer, and network or association, who play an essential part in the automated payment system. 

Smooth execution of the credit card payment process is essential, so here is a step by step overview of a successful transaction.

Authorization

The authorization process determines that the buyer has sufficient funds at hand before touching their credit limit to complete a transaction. As a result, this reduces the risk of merchant handing over goods for which a buyer is unable to pay. Hence authorization confirms that the customers have enough money or credit to purchase the requested service or product. Top Payment and Card Solution Companies

Batching

With the completion of authorization, the merchant gives the requested goods or services, and the customer has no role to play in the process any further. But the transaction is not yet finished, and the merchant electronically stores the payment information for every authorized sale throughout the business day. In the end, the batch is sent to the acquirer, and he keeps it temporarily in its own secure, electronic system. As the acquirers have many individual merchant clients, multiple batches are stored according to their own needs. 

Clearing

Post getting the merchants batch in hand, the acquirer can now begin the clearing process. It is a fun part for the intermediaries as they finally get paid. 

Funding

Also known as the final step in the transaction process, finance is the part where the merchant receives funding for the transaction. 

Although the traditional electronic card transaction is authorized and the customer goes out of the picture in seconds, this four-step process might sometimes take many business days to complete. It can also take a month or even longer for the customers to be able to pay the issuing bank.

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