Make Payments Simple And Easy With Credit Card Processing

Using a small plastic card is so simple and easy to make payment where ever you go around the world. From purchasing grocery to going on vacation swiping this small card is very easy and convenient mode of payment. Making payments with a credit card is Known as credit card processing is a four stage process which involves.

• Cardholder: – The owner of the card.
• Merchant: – The business accepting credit card payments.
• Acquirer: – The financial institution that provides card payment services to the merchant.
• Card association: – Companies like VISA or MasterCard acts as a gateway and are the manufacturers of the card.
• Issuer: – Financial institution or bank who issues card to the card holder.

Credit card processing is a flow of information and money it consists of few steps to make the payment successful and easier.

1. Authorization

   This is the first and initial step for making payments through credit card. The cardholder hands over the card or swipe, the information on the card will be sent to credit card processing network and reach the financial institution which shows the available balance and authority to use the card. If the request for payment gets approved the merchant will get the authorization number and the financial institution takes the credit from cardholder’s limit. If the institution denies the request saying insufficient funds or no credit limit then the cardholder has to use another form of payment.

2. Funding

   After the first stage next stage is funding in this stage the financial institution of the card holder transfer money to the merchant’s account. After the swiping of the card the financial institution keep aside the requested funds known as “batching” and “clearing”. The amount which is received by the merchant is same as the requested amount of payment and minus discount rate, which is the fee for processing the transaction.

3. Batching

   In this process the merchant will collect all the authorization numbers which credit card processing or merchant account provides. This is known as batching. The merchant will send the batch to his account to receive the payment. This is a authorized batch which merchant sends at the end of all the transactions.

4. Clearing

   The fourth step is clearing it starts after the batch is sent to electronic card network and the details of each transaction is sent to card holder and after subtracting some amount as fees of the institution the remaining amount will be deposited in the merchants account. Credit card processing companies usually charge fees to merchants for the services they provide. Many companies charge per transaction fee, it also depends on the type of service they provide like through internet, phone or point-of-service terminal. They charge monthly processing fee or annual membership fees. This whole process usually takes three days.

Credit card processing is very beneficial for business and cardholders. You can grow your business by making payments easy. This is an efficient, convenient mode of payment that helps in cash flow with automatic deposits to your account. Some merchants get value added services from the credit card processing companies.

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