Have you ever wondered how your credit cards get processed? While purchasing, using a credit card is perhaps the easiest thing to do – just swipe, sign, and walk away with your goods. In those few seconds while waiting for your card to be accepted, however, a lot of things happen. Essentially, there are three six (6) stages which you should familiarize yourself with – just so you really know what happens in those two (2) or three (3) seconds of waiting.
In this article, we will discuss the six stages of credit card processing. In essentially three (3) seconds, you can walk away with something that you bought on credit. Is it not interesting to find out how this can be done exactly? While the process is quite complex, it is simplified with regard to time to make you believe that everything is as easy as 1, 2, 3.
First Step: Consumer Level
The first stage takes place on the consumer level – yes, we are talking about you. This takes place when you swipe your card, dip your card, or hand over your payment information to the sales person of the shop that you are purchasing from or your merchant.
Second Step: Merchant Collects Payment
In this stage, the merchant accepts your information and collects payment. This can be done in two ways, however:
The first way is through physical card present transactions – this happens at the store with a credit card reader.
The second way does not happen in a physical manner – this time, you can do it through an online transaction. Instead of using a card reader, they can input their information online and an online gateway platform should be able to collect payment from you through you (the customer).
Third Step: Credit Card Processor
Now, this is what you do not see happening -the credit card processor routes the given data to the credit card network. While this is happening, the processor also passes the given data to all other platforms which will help in deciding whether or not payment is approved.
Fourth Step: Operation In Major Credit Card Network
The two most common major credit card networks would be Visa and MasterCard. When the network receives payment from the processor, it is then passed on to your bank.
Fifth Step: Your Bank Will Seal The Deal
When this information reaches your bank, it will verify whether or not you have the funds to be making that purchase. In addition to that, the bank may also require a few other security measures in order for them to know whether or not it is a legitimate purchase. If they see that the customer has the appropriate funds, is within the given credit limit, and can verify that the purchase is not a fraudulent one, then a message is sent back to all the networks through the credit card processor. At this point, your purchase should be approved and the transaction should go through smoothly.
Sixth Step: Back To The Merchant
And it all comes back to the merchant as they will tell you whether or not your purchase has been approved or declined. If it is approved, then you can walk out with your goods or services purchased.
And there you have it – the six (6) stages of credit card processing. Just to repeat it again – this all happens in just two (2) or three (3) seconds. Quite the complex process, but it is simplified because of such powerful technology today. With data being transferred in just a fraction of a second, we can definitely tell that there is a lot to look forward to in the coming years. Visit creditcardprocessor.company to learn more about the ins and outs of credit card processing. Also, read https://www.law.georgetown.edu/campus-services/student-accounts/upload/data-security-protect-terminals-from-illegal-tampering-020513.pdf to make sure you keep your business and customers safe.
Before signing up with a credit card processor, know how things work. Understand more about the industry and what small business owners should know when it comes to credit card payments at creditcardprocessor.company.