Emerald Business Systems Blog

How Credit Card Payment Processing Works

Posted in Bars and Taverns,General Business,PCI,POS,Restaurant,Retail by ebs4pos on March 12, 2010

Credit cards have become so popular today as a means of payment that they are accepted by almost every merchant that exists today. With the credit card being so popular, there have been a lot of banks that issue credit cards of either own and most of the credit cards that exist today make use of either Visa or MasterCard. However, even though there are various credit cards that can be found these days, all of them actually work in the same way.To start a payment process that uses a credit card, a merchant should first calculate the total amount of items that a buyer is purchasing. Then, after the merchant has received the credit card from the buyer, he or she will then swipe the card by passing it through an insertion line in a point-of-sale unit that has been designed especially for credit cards. At this point of time, it is necessary to determine the total amount to cut off the credit card in use.There are usually 2 ways of determining this total amount. The first way is that the merchant enters the amount manually by typing it into the point-of-sale machine. Another way is to transmit the amount digitally by means of transmission from the cash register. Either way it will usually work just fine since they are basically used for the same purpose.After this process has been completed, the merchant then sends the transaction and credit card details to the acquiring bank of the credit card. This bank then forwards the information to the issuing bank of the card. The issuing bank will then check whether or not there are sufficient funds for payment. If not, transaction is rejected. Otherwise, the issuing bank will generate and send back the authorization code so that payment can be made. Then, the acquiring bank forwards the authorization code to the merchant’s point-of-sale machine.After all the above processes have been completed, a proof of purchase by means of a credit card will be printed. Then the payment process is thoroughly done.

via How Credit Card Payment Processing Works – American Banking News.


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