How It Works: Credit Card Processing

How It Works: Credit Card Processing

December 1, 2017 | 3-minute read

Credit and debit cards are the way of the world, and your business can’t live without plastic payments. So you choose a payment processor to help you easily take cards; customers are happy and business thrives. But how does a transaction go from a swipe to money in your bank? Let’s take a look:

  1. Your customer provides their card for payment. It gets inserted, swiped or tapped using your point-of-sale solution. Your point-of-sale solution can be custom software for your industry, a gateway like PaymentSpring, a terminal or even a mobile swipe device.
  2. That card information travels through a payment gateway (like us) for verification. End-to-end encryption and tokenization are used to ensure this sensitive information stays safe.
  3. The transaction information is then routed through a merchant processor to the applicable card brand (Visa®, MasterCard®, Discover® or American Express®).
  4. The card brand passes the transaction to the issuing bank, who verifies the funds are available and authorizes (or declines) the transaction.
  5. That authorization or decline information travels back through the previous channels to the payment gateway where your system receives the information it needs to complete the transaction.
  6. The processor debits the issuing bank (that is paying on behalf of its cardholding customer) and facilitates the settlement of payment (to you) and fees (to the card brand).

Who would’ve thought so much could happen in the time it takes to insert a card and get an “approved” response back? Ah, the magic of payments. Check out how we keep this important information safe. (Spoiler: It’s not magic…though tokenization is the next best thing.)

Let’s make some payments magic.

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