Have you ever wondered exactly how credit card processing works? The behind-the-scenes details of payment processing involve a number of financial institutions. The payment process from your point of view as a merchant is a bit simpler, however. Below are the six basic steps of accepting credit card payments.
6 Steps of Credit Card Processing
1. Purchase Whether online or in person, the customer selects his or her products and brings them to checkout. Assuming the merchant is prepared to accept credit cards, then the process can begin.
2. Transaction The credit card is swiped, the EMV chip is inserted, or the credit card number is entered manually to the credit card device or the company website.
3. Transmission The customers information is then sent to the banking institution through the terminal, online gateway, or Point of Sale system. Secure processing is crucial at this stage, as sensitive customer information could otherwise be compromised.
4. Acceptance If the card is valid and the customer account has the necessary funds available, then the customers banking institution will accept the card and send an approval message to the point of sale. Of course, if these conditions are not met, then the banking institution will decline the transaction, meaning an alternative payment method must be accommodated.
5. Batch Closure At the end of the day, the merchant finalizes all transactions from the day in a process known as batch closure. This allows the processors bank to officially collect the money that has been made available from the customer’s bank.
6. Deposit Barring any complications, credit card funds will be made available to the merchant within 48 hours by way of an automatic deposit into their bank account.
For more information on accepting credit card payments both in-person and online, contact NXGEN today.