What Is Credit Card Processing, And How Does It Work?

Credit cards come to the rescue of a lot of people. They enable someone to access a service or purchase goods and pay for them later. In the current century, almost everyone has operated using a credit card.

Credit cards are beneficial to businesses, they act as financial storage cans where you can easily pull all the funds you need. This can be used to meet the available expenses, restock and get new items for your business.

Services such as express merchant processing solutions are efficient when it comes to processing a credit card and the support given after processing the credit card. So, what is credit card processing?

Credit card processing is the process of signing up for a credit card by providing your details. These details include your employment, your details, bank details and referees. Before you can access any item on credit, credit service providers have to ensure you are capable of returning all the money they invested in you.

Parties involved in credit card transactions include:

– A cardholder – This is the person who uses a credit card to access items and services. They are issued with the card, and it is under their name.

– A merchant – This is a business that transacts by accepting payments in the form of credit, for goods or services.

– A merchant bank – This is a bank that accepts cash deposits from credit card payments.

– Payment processor – This is a company that authorizes all transactions connected to the credit card.

– Issuing banks – These are financial institutions that issue credit cards to the cardholder.

– Card associations – Come up with standardized qualities between the issuer and the acquirer.


What does a credit card process look like?

There are three major steps taken to authorize a transaction from the cardholder to the bank. They include authorization, settlement and funding.


Here, a request is sent out to the issuing bank after a cardholder presents the credit card and swipes it to the Point-of-Sale machine. The issuing bank can either authorize or decline the request sent. If approved, the issuing bank sends an approval status to the merchant to proceed with the purchase. If not approved, the transaction shows an error.


Here, a merchant sends authorized transactions to the payment processor. The payment processor communicates with the issuing bank along their line. Afterwards, the issuing bank charges the cardholder the amount needed for the transaction that took place earlier. The issuing bank then transfers funds to the merchant bank, which later deposits to the merchant account.


Here, it may take several days to deposit money for the transactions that took place earlier from the buyer. Depending on the merchant service providers, some take more days than others.

In conclusion, credit cards are efficient when purchasing items and settling bills. You can easily and conveniently make payments from the comfort of your home and still access all the goods and services you need. In case you have any doubts, try a credit card today.