Credit Card Processing Steps
- A transaction begins when the magnetic stripe on the back> of the credit card is passed through a credit card terminal, or the credit card account number is entered into the system manually by either the merchant or the cardholder. This enters the transaction information into the Processor's network.
- An Authorization Request is generated.
- The Processor links up with the Visa/MasterCard network in order to transmit the Authorization Request to the Issuing Bank's computer network.
- The Issuing Bank verifies that a valid credit card number has been received and that the Cardholder has enough money available to fund the transaction.
- A "hold" for that amount is placed against the Cardholder's Open to buy thereby reducing the amount of his or her open to buy for future transactions.
- Once the approval is received a "Deposit Transaction" is transmitted which finalizes the transaction. The merchant then releases the items purchased by the Cardholder.
- The Net Settlement Amount is deposited to the Merchant's account usually by the end of the same business day.
