Three main players are involved in the debit or credit card process, whether it is online, via phone or in person.
You, as a business owner, or merchant, are on one side, and your customer is on the other. In between, you’ll find the technology that connects both of you.
1. You Are the Merchant
You’ll need to hire a Merchant Bank (also known as an acquirer) that will accept payments for you and deposit them into your Merchant Account.
2. You Can Access the Bank Account of Your Customer
Your customer will need to use a debit or credit card to pay for services and goods. issuing banks are the banks that approve the card payments for your customers and credit them with the money to pay you.
3. The Technology
The two technologies are what allow you to do a transaction with your customer.
The payment gateway is a piece of software that connects your shopping cart on your website to the processing network. The payment processing (or Merchant Service) then takes over, which includes all the work such as moving the transaction along the processing network, contacting the bank, generating a bill, processing debit and credit cards, etc.
The result is that a customer can successfully purchase without cash, and the business completes a successful sale.
What Is an Online Transaction?
Payment processing may seem simple on the surface but it’s more complicated than just swiping a debit card or tapping a credit card. Payment processing includes authorization, tamil bio funding, and settlement of a transaction.
This is what happens to a customer when they make a purchase.
Step 1: Engage the Point of Sale System
The point of sale system is the place and time where a retail purchase is completed.
Payment methods vary at the point of sale, from checks and cash to debit/credit card payments. Digital payment methods are used by consumers to pay for in-store purchases and online transactions.
#Step 2: Connecting With a Payment Gateway
Payment gateways are mechanisms that transfer payment information between a merchant and a customer.
#Step 3: The Payment Processor Enters the Picture
The merchant submits an authorization request to the payment processor. The payment processor also performs essential steps.
- The payment processor sends the transaction on to the card association that is associated with the bank that issued the card.
- The issuing bank will accept or reject the payment according to pre-set parameters.
- The issuing bank then sends an approval or rejection status to the merchant bank, and it finally reaches the merchant account.
#Step 4: Transfer money to the merchant account
When a transaction has been processed and approved, the funding and settlement process begins. The transaction is deposited in the merchant’s bank account.
The card association is linked to the issuing banks. Therefore, the issuing banks receive transaction details and then continue the process which includes:
- The cardholder is charged a certain amount by the issuing bank for each transaction.
- After subtracting the interbank fee, the issuing bank will then transfer the amount due to the merchant bank.
- The merchant bank transfers the money to the merchant’s account.
This post was written by a professional by Exzact Business Solutions. TRANSPARENT | AFFORDABLE | SIMPLE Merchant Services, Websites, and Social Media Done Right. Exzact Business Solutions are on a mission to educate local businesses to ensure smiles, savings, and solutions. Exzact clients save an average of 30% on their processing alone. No Contracts, Free Equipment, Local Support, No Rate Increases, and More. Exzact Business Solutions goal is to educate the local business community in order to ensure smiles, savings and solutions. Exzact Business Solutions is an Independent Sales Organization with strategic partnerships dedicated to cultivating reliable and trustworthy relationships in the Payment Card Industry, allowing to tailor products and services to the needs of each merchant. Contact EBS and see what a difference having the right advocate can make! Click here to learn more!
