How Exactly Does Credit Card Processing Work


Do you own a credit card, yet you don’t understand how to use it and how it works? Perhaps you’re having trouble managing your cards that may end up incurring charges. Get to know the credit card processing services and more about them.

1. Purchasing or Swiping

When purchasing goods or services from a merchant that honors credit card processing services, the merchant will swipe it through their point of sale machine to be processed.

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2. Pont of Sale

This is where the transaction is entered and sends out authorization to the processing network; whether it’s Mastercard or Visa.

3. Issuing Bank

After sending the authorization, the bank approves or declines the transaction based on your available credit limit.

4. Approval

Once the bank approves the transaction, it would pass through the electronic networks, going back to the processer and the code for the approval would be delivered to the POS of the merchant.

5. Bank Reimbursement

Once the transaction is posted on the merchant and bank’s end, the issuing bank would send the money to the processing company to reimburse for the purchase made.

6. Batch Processing

The end-of-day transactions would be processed per batch by the merchant to the processer so the proceeds would be credited to their bank accounts.

7. Billing

Finally, the issuing bank will send the bill to the cardholder as payment for his purchase.


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