Credit Card Processing Provider responds quickly and efficiently when it comes to bulk payment processing
As today’s marketplaces become more digitized, businesses must adapt to new and emerging technologies. This is especially true when it comes to diversifying the payment methods accepted.
According to a survey of 1,800 consumers, 84 percent of respondents believe it is critical for a business to accept credit cards. Certain types of businesses, such as restaurants, supermarkets, and retail establishments, had even higher expectations.
In other words, it is critical for any business today, regardless of size, to accept credit card payments, whether through a POS device, online, or over the phone.
However, doing so necessitates the use of a provider capable of handling each credit card transaction safely and securely via credit card processing.
Who are the participants with Online Credit Card Providers?
The seamless collaboration of these 6 participants allows each credit card transaction to take place in a matter of seconds.
Customers – Customers, or cardholders, must provide their credit card information at the time of purchase.
Merchants – A merchant is a company that sells goods or services to customers and allows them to pay with a credit card. The merchant also sends credit card information to the customer’s card-issuing bank and requests payment authorization.
Acquiring Bank – Whether a merchant interacts with customers online, over the phone, or in-person, a merchant account from an acquiring bank is required to process credit card payments. The acquiring bank serves as a go-between for the merchant and the cardholder’s bank.
Payment Processor – A payment processor is a third-party company that allows the merchant to accept credit, debit, digital wallet, payments. Credit card processing companies provide the terminal or point-of-sale device, which accepts and transmits credit card data to the network as well as approval requests to the acquiring bank.
Credit Card Network – The four major credit card networks, Visa, Mastercard, Discover, and American Express, are in charge of receiving credit card payment details from acquiring processors, forwarding payment authorization requests to cardholders’ issuing banks, and transmitting the issuing banks’ responses to the acquiring processor.
Card-Issuing Bank – The issuing bank is the bank that issued the credit card used in the transaction to the cardholder. It receives payment authorization requests and either approves or denies the transaction based on the cardholder’s available balance.
How Credit Card Processing Works?
Making a credit card purchase initiates a complex process in which data is sent from the customer’s credit card to the merchant’s POS device, and then to the cardholder’s bank – all in a matter of seconds. In fact, swiping or tapping a credit or debit card and signing the receipt are only the first and last steps in the credit card processing process.
A thorough breakdown of this process can be divided into three stages.
1. Authorization for Payment
- Payment is the first stage of any credit card transaction.
- Customers pay in-store by swiping (magnetic stripe), tapping (contactless card), or dipping (EMV chip cards) their card. They can also use a credit card-linked digital wallet, such as Apple Pay.
- The customer enters their credit card information into a payment form on an app or website.
- A virtual terminal secures credit card processing for phone transactions.
The merchant’s credit card terminal or website sends the cardholder’s information to the store’s acquiring bank or processor. Including the credit card number, expiration date, security code, and payment amount. This information is sent to the appropriate credit card network (e.g., Visa or Mastercard). Which then forwards it to the customer’s issuing bank for authentication.
2. Payment Authentication
The issuing bank receives the payment request and verifies whether the cardholder has sufficient funds to make the purchase. The bank will also take security precautions to verify the cardholder’s information and determine whether the transaction is fraudulent.
If everything checks out, the bank account approves the transaction. And notifies the payment processor, who then notifies the credit card reader or terminal.
The clearing stage occurs when transaction details are sent to the cardholder and international merchant services in the form of statements. The merchant sends a batch of approved credit and debit card transactions to the acquiring bank or processor at the end of each business day.
The card processing company then sends the transaction details to the corresponding credit card network, which then sends it to the appropriate card-issuing bank. To keep the system running, funds and transaction fee shares are transferred between banks, credit card networks, and acquiring processors.
How Credit Card Payment Provider process the payments?
The flow chart below will give you a good idea of how a typical one-step sale credit card payment works. Please keep in mind that this is extremely high-level. A real payment process, especially one that your company is dealing with, may include additional steps (like 3D Secure). It may also deviate in key aspects, particularly if the two-step authorization/capture flow is used.
- The Cardholder makes a purchase at a merchant by completing a checkout process. This necessitates the cardholder entering their credit card information, either on the merchant’s on-platform checkout page or on an external page presented by a payment Gateway or a payment service provider. The payment is initiated once the card details are successfully entered.
- The transaction request (containing the relevant card data) is sent to the Payment Gateway from the Merchant’s platform.
- The Payment Gateway forwards the transaction data to a payment service provider or acquirer with whom the merchant has a business relationship.
- The payment in question is validated by the Acquirer. If it is not approved, the Cardholder receives an error message from the Payment Gateway. If the transaction is approved, it will proceed.
- The transaction data is sent to the Payment Card Scheme by the Acquirer.
- The Payment Card Scheme forwards transaction data to the Issuer for authorization by the Cardholder’s bank.
- The Issuer determines whether the Cardholder’s account balance is sufficient. If this is the case, the funds are authorized.
- Following that, the Issuer sends a confirmation to the Payment Card Scheme.
- The Acquirer receives the confirmation from the Payment Card Scheme.
- The confirmation is sent to the Payment Gateway by the Acquirer via the Payment Service Provider / Payment Processor.
- The Merchant is notified of the authorized funds.