Credit cards have become more of a necessity then a facility as it used to be in the past. Before you make you next deal with a credit card company, you need to understand the blueprints on which the card processing has been working so that you don’t make the mistake in the handling as many people do. Being a customer, you are expected to use the credit card for different transactions and your details are recorded with every transaction. The information is verified from the financial institution and then the transaction is validated.

Parties Involved in the Process:

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There are several parties that remain constant involved in every credit card transaction:

• Cardholder:  The person to whom that card is entitled.
• Merchant:  The sources that are accepting the card for payment for any product or services that are being traded to the cardholder.
• Acquirer:  The bank or credit card company that is providing the credit card processing services to the merchant.
• Card Association: VISA, MasterCard, Discover, Orix are all card association that serves as a medium between the card acquirer and the issuer in order to validate and authorize to fund transaction.
• Issuer: The bank or credit card company that issues the card to you.

Flow of Information:

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The information that is carried in a credit card transaction flows in a harmony. The information flows from one direction while the information from the other direction making the overall process called as interchange.

The following processes Summarize the complete package:

• Authorization: Authorization is the first process as soon as you give your card to the merchant. The merchant swipes the card into the machine and within a few moments, your card number and transaction amount are both validated.
• Batching: Once the transaction is done, it is moved to the batch. Merchants send acquirer the batch at the end of the working hours usually.
• Clearing and settlement: The acquirer sends the information to the card association that in turns send the transaction to the card issuing financial institution.
• Funding: The issuer then pays the acquirer that moves the payment to the merchant then after all deductions that are being made.

The combination of all these processes might take 1-3 days depending on the efficiency of the system. In case there is a chargeback, the complete transaction reverses in the same was as it is processed forward.

Benefits of Credit Card Processing:

Credit card processing is a great deal irrespective of the size of your business or industry and you can possibly come up with a number of benefits out of the credit card transactions. You get a wide range of customers who do not carry cash in their pockets increasing the scope of your customers. Apart from these benefits, the credit card processing is one of the spontaneous and effective process that gives you with a relaxing and calming feel as you need not to deal with the change all the time and the computer is going to make all the deal done.

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