The Journey of a Credit Card Transaction

Article Written by : HMS Weather

As a merchant, we run our customer’s credit card through our credit card machine, let it process the transaction, and then think nothing about it after they sign the copy. But knowing the credit card transaction process inside and out as a merchant will allow you to make highly educated decisions on which merchant account services you will use. You will know which services are in your best interest, and which ones are not. The 3 goals in business are: to make money, to save money, and to keep customers happy. Knowing how the credit transaction process works will help you do that.

For those who use an Ecommerce merchant account, the process is relatively similar to those using a machine.

1. 1. 1. First, the credit card holder will give you their card to initiate the transaction process.
   2. 2. The merchant, that’s you, uses their machine, software or gateway to transmit the cardholder’s information to their bank or credit union.
   3. 3. The acquirer, that’s us, routes the information through the Visa or MasterCard network, and then routes the cardholder’s information from their bank to you for settlement.
   4. 4. The information is then rerouted to your account. The Automated Clearing House (ACH) deposits the cardholder’s payment into your account, and also debits your account for any processing fees.
   5. 5. The bank you have your account with pays the acquirer for any purchases.
   6. 6. In turn, the cardholder is responsible for paying their bank back for essentially borrowing money from them.

This process is like a big borrowing chain. The acquirer alleviates the responsibility from the merchant to insure accountability with the cardholder that they will pay what they owe, so the merchant can spend more time building business. You will want an acquirer that has a strong history of providing an accurate and quick experience while credit card processing online.