MERCHANT STRONGHOLD
Offshore Merchant Account Service Provider
Credit Card Processing Work Credit card transaction
Credit card transaction is not a new concept. Everyone claims to know the process: swipe the card, hit the button and the transaction is complete in a blink. But do you really know the process? Do you think that it is as simple as it seems? It actually is a much more complex procedure than what you witness.
Key Players CARDHOLDER
There are two types of cardholders 1.Who repays full credit card balance? 2.Who pays only a portion of balance and rest accrues interest?
MERCHANT It is a vendor who sells product or services. The job of a merchant is to accept payment through a card, send the card information to the issuing bank and request payment authorization.
MERCHANT’S BANK It is also known as acquiring the bank and is responsible for sending an authorization request to the issuing bank through a proper channel followed by communicating the response of the issuing bank to the merchant.
SERVICE PROVIDER Also known as acquiring processor is a third party entity that works as an arm of the merchant’s bank. It provides service or device that allows the merchant to accept credit card for payment and also sends the credit card details to the credit card network and further sends back payment authorization to the acquiring bank.
CREDIT CARD NETWORK Also referred as Association member, operates the network to facilitate the credit card payment process, worldwide and administrate interchange fees. Credit card network receives details of credit card payment from the service provider and forwards the request for authorization to the issuing bank. In return, it sends a response of the issuing bank to the service provider. Some of the examples of the credit card network are Visa, MasterCard, and American Express.
ISSUING BANK Also called the credit card issuer is a financial institution that provides the customer with a credit card, which is involved in the transaction. After receiving the authentication request from credit card network, the issuing bank either approves it or declines it.
Credit Card Transaction Process Let us understand transaction process in just three steps
STEP 1: AUTHENTICITY At the point of sale, a cardholder gives the card to the merchant to swipe the card on POS terminal to make a payment. Credit card details are sent to the acquiring bank, which forwards the same to the credit card network
Credit card network clears the payment and a request is sent to the issuing bank for an authorization. Authorization request includes credit card number used for the payment, expiration date, billing address, card security code and the payment amount.
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