The Ultimate Guide to Credit Cards

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How Does Credit Card Processing Work?

There are quite a few steps that take place to process a payment when you make a purchase from a merchant with your credit card. Below is the four-step process that occurs each and every time your credit card is swiped in exchange for a good or service.

1. Authorization:

This is the only step that happens while you are at the register. By swiping the card, the merchant sends your credit card information to an acquirer, which is the messenger between the merchant and the credit card company. The acquirer sends the request to the credit card company or issuing bank. If the issuer says you have enough money in your account, it will tell the acquirer there are funds available to run the card, and give approval to the merchant. Long story short, someone asks if your card is good to go, and then someone else answers yes or no.

Authorization process

2. Batching:

At the end of the night, a merchant will gather all the transactions from the day and put them into a “batch.” This batch is sent to the acquirer who then passes the information through to the issuers. This is done so the merchant can get the funds from the credit card companies and banks.

Batching process