Credit Card Payment
Process Credit Card Processing
The ease and simplicity of the credit card payment process is an illusion.
It hides a complex network of banks, credit card networks, and service providers that each perform their duties in the background (and you’ll, of course, charge you for the trouble). their).
The guide below covers the details of the credit card payment process that you need to know.
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Table of Contents
Who’s Involved in the Credit Card Payment Process?
Stages in Credit Card Payment Process
Validation and Authorization
Deletion and Payment
When Will Your Business Get Paid?
How can corporate tools® help
Who is involved in the payment process?
If you read our general guide to How Credit Cards Work, you already know that accepting credit card payments is basically the same as getting a loan, and that means the card payments industry is a risky business. The risk around that is the main reason why there are so many players involved and why credit card processing in general is so complicated.
Of course, you can have your business accept credit card payments without knowing the details of the credit card payment process, but the more you know, the better your chances of avoiding mistakes. This is a common mistake for businesses that accept credit and debit card payments.
That knowledge really starts with learning how to talk, so we’ll define the most important key terms in credit card payments below before moving on to a detailed description of the stages involved. .
Key Terms and Definitions
Credit Card Networks Credit
card networks determine where a particular brand of credit card is accepted and sets an exchange fee for each transaction. There are four main credit card networks: Visa, MasterCard, American Express, and Discover. Credit card networks are also commonly referred to as “card associations” and “card schemes”.
A cardholder is a customer or customer who makes a payment or purchase using a credit or debit card.
Issuing organization / Issuing bank
The issuer grants the cardholder the right to use the card, determines the cardholder’s credit limit, and approves or declines the transaction. Most credit and debit cards are issued by banks that work with Visa or Mastercard, but American Express and Discover act as both the credit card network and the credit card issuer. The issuer is also often referred to as the “issuing bank” or the “cardholder’s bank”.
The seller is you — the business that accepts credit or debit card payments.
Credit card processor
A credit card processor or “payment processor” is employed by a company’s business to process its credit card payments. Credit card processors provide businesses with access to merchant accounts through the purchasing bank and manage the merchant’s credit card settlement.
Stages of the payment process
It usually takes only a few seconds for a credit or debit card payment to be made, but in that short time a large number of events have taken place. These events can be divided into the stages described below.
Note: This page provides a general description of the credit card payment process. If you want a less abstract approach using a simple real-world example, check out our page on Buying groceries with a credit card.
Authentication and Authorization
This is the stage most of us associate with the credit card payment process. That’s when cardholders and merchants interact — in person, over the phone, or online — and complete their transaction. But there’s a lot going on in the background that we don’t see.