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How Credit Card Transaction Processing Works?

Let's say you're out at dinner and you decide to split the bill with your friends. You pull out your credit card to pay and hand it to the waiter. The waiter then takes your card and swipes it through a machine at the front of the restaurant. This machine is called a payment terminal, and it's used to process credit card transactions.
So, what happens behind the scenes when your card is swiped? Credit card transaction processing actually involves a few different steps. Here's a look at how it works:

  1. The payment terminal communicates with the credit card issuer's network.

When your card is swiped, the payment terminal sends a message out to the credit card issuer's network. This message includes a unique identifier for your card, a cryptogram and a transaction amount.

  1. The Credit Card Issuer verifies that your account will be able to handle the request.

The Credit Card Issuer checks with you via an electronic authorization system to determine whether or not your account is currently in good standing. It also verifies that you have enough funds to cover the requested transaction amount.

  1. The Credit Card Issuer sends an approval or denial message back to the payment terminal.

If your account is in good standing and you have enough funds to cover the transaction, the Credit Card Issuer will send a message back to the payment terminal with an approval. Many Credit Card Issuers will also give you a reference code in this message, which is a unique number used to identify a particular transaction. If your card isn't approved, the Credit Card Issuer will send a denial message instead.

  1. The Credit Card Terminal forwards the response message back to the merchant.

If your Credit Card Issuer sends an approval message, it will be sent back to the Credit Card Terminal, which will then forward it on to the merchant's payment processing network for further processing. Merchant's payment processing networks are generally provided by third-party Credit Card Processors or Credit Card Processors. This is where your transaction will be finalized and the funds will be transferred from your account to the merchant's.

  1. The merchant receives notification that the transaction is complete.

Once the Credit Card Transaction has been processed, the merchant will receive a notification that the transaction is complete. This notification will typically come in the form of an electronic receipt, which will include information such as the date, time and amount of the transaction.
So, that's a basic overview of how credit card transaction processing works. It's a fairly complex process, but it's necessary in order to ensure that your payment is processed safely and securely. If you have any questions about credit card processing or need help setting up a payment processing system for your business, be sure to contact your Credit Card Processor or Credit Card Processor. They should be able to help you get set up and started.
If you're looking for a Credit Card Processor that can provide you with the best possible rates and services, be sure to check out our Credit Card Processing Solutions. We offer a variety of Credit Card Processing Solutions that are perfect for small businesses, and we're sure that we can find the right solution for you.