How the Credit Card Processing Flow Works

Credit card processing flows

Credits for this image go to Credit Card Processing Blog

Credit card companies are well known for being the provider of electronic charge cards to millions. However, these companies are not the only business entity involved in the actual processing a credit card transaction. The process involves multiple players, including merchants, credit card processers, credit companies that provide the related lending, and eventually the cardholder’s bank.

The credit card transaction starts well before any purchase occurs. The first player in the process is the issuing bank that provides the credit card to an individual buyer in the first place. The card is issued and synced with the credit card company once an account number is designated to the individual. The issuing bank will also be the collector of debt when the account balance comes due.

The Purchase Itself

With the card the buyer goes to a merchant and makes a purchase. The merchant already has a merchant account established with another issuing bank synced with another credit card company, allowing the merchant to accept credit cards. As the buyer’s card is swiped, the data is transmitted via specialized equipment to an authorization network. This allows an exchange and validation with the issuing bank (more…)