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Learn about Payment Processing

How Credit Card Processing Works


If you are not familiar with how credit card processing works, this page will give you a basic understanding of the process.


Making the Sale

At the point-of-sale your customer decides to use their credit card for payment: VISA, MasterCard, American Express, or Discover.

Commonly you will ask your your customer if this is a credit or debit sale, due to the way offline and online debit cards are processed.  You will will then swipe or key their payment card, which produces a transaction for the payment.

Upon approval of the sale, a receipt is given to your customer.  For swiped - face-to-face - transactions the customer usually signs a copy of the receipt.


The Transaction Process

This takes place once your equipment connects to the payment network.  It is where all the complex work is done.  This usally only takes 3-4 seconds.

The sales information travels from your processing equipment across the secure payment network to where your merchant account resides.

At your merchant account, an authorization request is created and sent to your customer's fininacial institution where the card was issued.  Your customer's fininacial institution receives the request and performs a series of test and makes sure there is enough credit available to cover the sales amount.

The authorization request is either approved or declined.  A response is sent back to your merchant account, where the transaction is added to a payment batch and then sent back to your processing equipment.

If the authorization request is approved, your customer's fininacial institution secures funds for the payment.


Getting Paid

To get your money, all transactions go through a settlement process.  This process is initiated by closing your open payment batches.  You would normally do this at the close of business each day.

During the settlement process the actual funds are moved from your customer's financial institution to your merchant account, and then deposited into your business bank account.  It usually take 48-72 to settle a payment batch.


Learn more about the benefits of accepting credit cards.